Gold prices rise on falling bond yields, trade uncertainty

Friday,   16-Aug-2019   09:15 AM (IST)

Gold prices gained on Friday as the steep fall in U.S. bond yields continued, while conflicting signals on the Sino-U.S. trade war added to economic uncertainty. Spot gold was up 0.2% at $1,525.21 per ounce at 0105 GMT.  The metal has gained nearly 2% so far this week, and is on track for its third straight weekly gain.  U.S. gold futures rose 0.3% to $1,535.50 an ounce. Data showing strong U.S. retail sales in July did not have an impact on the bond rally. Yields on 30-year paper hit an all-time low and are set to fall 27 basis points for the week, the sharpest such decline since mid-2012. China on Thursday vowed to counter the latest $300 billion U.S. tariffs, but also called on the U.S. to meet it halfway on a potential trade deal. On Thursday, U.S. President Donald Trump said he believed China wanted to make a trade deal, and that the trade conflict would be fairly short. Investors are focused on the Federal Reserve’s annual symposium next week. Traders see an about one-in-three chance of a 50 basis-point rate cut by the Fed this September. The European Central Bank’s (ECB) Olli Rehn on Thursday flagged the need for a significant easing package in September. The ECB is widely expected to cut interest rates by at least 10 basis points when it meets next month. Mexico’s central bank cut its key lending rate for the first time since June 2014 on Thursday. Against a basket of six major currencies, the dollar index edged higher. Since hitting a three-week low on Aug. 9, the dollar index has recovered, rising 1.1%.