SMM: on Thursday, spot gold gave up all its gains as the dollar index stabilized and rebounded, and House Speaker Nancy Pelosi hinted that the two parties could not reach a compromise on the stimulus package before the election, easing the selling pressure on the dollar. Apart from the negotiations over the US stimulus package, the market focus is on the upcoming US election. Rating agencies are concerned that new concerns could be raised if Mr Trump stays in power or does not acknowledge the defeat.
North 20 23, spot gold fell 0.92% to $1906.50 / oz; COMEX gold main contract fell 1.11% to $1908.4 / oz; and the dollar index rose 0.31% to 92.934.
The dollar index hit 92.469 overnight, its lowest level since Sept. 2, as markets raised expectations that Congress was close to a new economic rescue package, boosting investor demand for risky assets.
Stimulus measures cannot be landed before the general election
But the prospect of the Republican-controlled Senate approving any bailout bill before the November 3 election remains bleak. Pelosi said Wednesday that despite opposition from Senate Republicans, she believes consultations with the White House can lead to a new economic aid deal for the epidemic. But she says it may not be until after the election.
A senior Republican aide said Senate Republican leader Mitch McConnell did not want to discuss large-scale anti-epidemic assistance in the Senate before the election and focused on confirming Barrett's nomination for the Supreme Court of (Amy Coney Barrett).
"I don't think the opportunity will get better after the election," White House Chief of staff Meadows said on Wednesday. If we want to do this this year, I think the time is now, otherwise we will never do it. " Some Senate Republicans also said Wednesday that it may be more difficult to pass the bailout package after the election.
Fed governor Brainard said the biggest threat to her outlook for economic recovery is that the federal government withdraws fiscal support too early and that "in addition to loose monetary policy, further targeted fiscal support is needed. In order to build a broad and inclusive basis for economic recovery."
Gold prices have risen more than 26 per cent so far this year, driven mainly by easing measures by central banks around the world. Gold prices were boosted by interest rate cuts and capital injections by central banks around the world in response to the economic slowdown and the novel coronavirus epidemic, lowering bond yields and increasing the threat of inflation.
The latest issue of the Fed's beige book released last day also reiterated previous warnings from Fed officials that an uneven recovery could be more or less permanent unless the federal government introduces more aid measures.
Nearly 2/3 of the states in the United States are at risk of the spread of the epidemic. 32 of the 50 states have entered the risk zone for infection, with more than 100 new cases per 100000 residents in the past week. The national average is 120 cases per 100000 people, the highest level since the peak in July.
"the United States is not far from the exponential and explosive growth of novel coronavirus cases," Dr. Leana Wen, a former Baltimore health commissioner, said on Twitter. We've seen a surge like this twice before. The difference now is that there are virus hotspots all over the country, and winter has not yet come. "
However, due to the widespread fatigue of the epidemic and the dire impact of the epidemic crisis on the economy, land materials across the United States will not seek draconian measures to limit public gathering and strike a balance between maintaining the demand for economic operation and curbing the epidemic.
Daisuke Karakama, chief market analyst at Mizuho Bank, said: "the current market pattern is like this: when the stimulus negotiations stagnate, the stock market will fall, while the dollar will get safe-haven buying." But if there is optimistic news, the market's willingness to take risks tends to rise and sell the dollar. "
I am most worried that Trump will not accept losing the election.
As the US presidential election approaches, the more influential observers of the election process are the rating agencies that determine the rating of the United States. Rating agencies have left the US rating unchanged, despite the severe economic damage caused by the novel coronavirus epidemic and the pressure on finances.
Two of the big three rating agencies, Fitch and Moody's, give the United States the highest AAA and Aaa ratings, respectively. S & P, a third rating agency, gives the United States a second-highest AA+ rating, in part because of concerns about U. S. finances.
But US President Donald Trump sends a mixed message about whether he will relinquish power if he loses. Rating agencies are paying close attention to the national and state elections on November 3 and say they could raise concerns if they fail to make a smooth transition or if the current government continues to hold on to power.
William Foster, senior credit rating director at Moody's, said: "if there are no clear election results after election day, we will monitor the process very closely." Fitch analyst Charles Seville wrote in a recent report that the maintenance of the current high rating depends on "the widespread acceptance and implementation of the transfer of power process".
Asked about the potential uncertainty in this year's election, a S & P spokesman said the agency's current views were reflected in its April 2 report. The report lists partisanship as a rating limiting factor.
With only 12 days to go before the US presidential election, the final debate between US President Donald Trump and Democratic candidate Joe Biden will begin later today. Gold investors are looking for a new direction as hopes of a fiscal stimulus deal fade again before the election.
Congress may continue to be divided
Some market analysts' models reflect a rise in the likelihood of a divided US Congress and disputed election results after the odds on the US presidential election have shrunk. Expectations of control of the US Senate suggest that although Democrats are more likely than Republicans to control the Senate, Republicans are more likely to control the Senate recently.
Analysts at Morgan Chase said in a report on Tuesday that the expansion of the odds of the US presidential election in the first two weeks of October meant there was less chance of a close or controversial election, which propped up the risk market, but the odds have begun to shrink again in the past two weeks.
While control of the Senate is "in jeopardy, we still have a good chance of getting the most financially conservative outcome in this election," Brown Brothers Harriman said in a report on Wednesday. Biden is likely to win the election while Republicans are likely to control the Senate without a large-scale economic stimulus package after the election.
Although it now seems that the US Congress is unable to reach any agreement on the new stimulus measures, under the ultra-low interest rate environment, the US dollar will maintain the pace of moderate depreciation, the demand for inflation hedging is slowly rising, and gold prices are still expected to rise further.
