SMM News: Thursday (September 24) Asian market, the dollar index basically stable, is now reported near 94.40. Spot gold continues to be under pressure and remains below $1860 an ounce. With the sharp rise in the US dollar, the gold price has fallen significantly recently, and if the US dollar remains strong, then the gold price is at risk of falling further. In addition, the technical side also indicates that the gold price may continue to fall. In Beijing, Federal Reserve Chairman Colin Powell will debut again on Thursday night, and investors will pay attention. In terms of geopolitics, the border situation between China and India shows signs of easing, but tensions in the Taiwan Strait remain tense, with Taiwanese officials confirming that PLA aircraft have flown in the airspace around Taiwan for the sixth time in the past seven days.
Gold prices tumbled on Wednesday to their lowest close in two months as the dollar continued to strengthen. Spot gold closed at $1863.05 an ounce, down $35.76 or 1.88%, with an intraday low of $1855.00 / ounce.
Gold prices continued to fall sharply on Wednesday and hit our main waiting target of $1860.90 an ounce, according to an article on the well-known website Economies.com. As bearish pressure continues, falling below $1860.90 an ounce will push gold down further and open the way for gold to fall to its main target of $1794.85 an ounce.
Chicago Federal Reserve Chairman Evans's speech on Tuesday became the "fuse" of the dollar's rally, putting significant downward pressure on gold prices. In a speech on Tuesday, Evans hinted that the Fed may raise benchmark interest rates ahead of schedule. The Fed's benchmark interest rate is currently between 0% and 0.25%.
"We can start raising interest rates before the average interest rate reaches 2 per cent, and we need to discuss that," Evans said in a discussion hosted by OMFIF, the international economic policy forum.
Mr Evans said that without another fiscal support package, the US economy could be at risk of a longer and slower recovery or even an outright recession. Evans also said he didn't think the open-ended (QE) policy was an important part of solving the problem.
The comments led to a surge in Fed interest rate expectations, with the dollar index breaking the 94 mark for the first time since July 28. The dollar index is up 1.3% so far this week.
Evans is not a member of the (FOMC) voting committee of the Federal Open Market Committee this year, but he will do so in 2021. Evans is usually considered a dove official.
Erik Nelson, macro strategist at Wells Fargo Securities, said: "what we have heard from the Fed in the past few months is that we will not raise interest rates for the foreseeable future. Then Evans came in and questioned the claim, so the market was caught off guard. "
"Evans' comments are very hawkish," said Edward Moya, a senior market analyst at OANDA in New York. He mentioned suspending quantitative easing and raising interest rates until the inflation target was reached. This surprised the market. The sooner we get to the other end of the virus, we will see a rise in interest rate expectations, which should further boost the dollar's rebound. "
Jim Wyckoff, a senior analyst at Kitco.com, wrote, "the recent rebound in the dollar index and the rebound in global stock markets in the middle of the week are bearish factors for the precious metals market. The recent rally in gold is in serious danger of coming to an end. "
Precious metals prices have been under selling pressure since the start of the week as rising cases of novel coronavirus in Europe and the US prompted investors to lift their bets on gold and silver and switch to the dollar, further depressing gold buying.
"the stronger dollar puts pressure on gold and Washington does not have any stimulus package, but we believe that gold is fundamentally and technically oversold and we will not go short here," ED&F Man Capital Markets analyst Edward Meir wrote in a report on Wednesday.
Chris Gaffney, president of TIAA Bank World Markets, said: "the dollar is staying strong, which has fundamentally depressed the price of gold."
George Gero, managing director of wealth management at Royal Bank of Canada, said it was not surprising that there was a big sell-off in the gold market because of a variety of factors. He pointed out that the threat of a second wave of blockades is dragging down economic growth, while slowing economic growth is dragging down the stock market. Gero added that concerns are even more serious now because investors are not too hopeful about new stimulus measures to protect the economy. He added that without the announcement of new stimulus measures, gold prices would continue to struggle.
Bob Haberkorn, senior market strategist at RJO Futures, said, "Gold should be driven higher by safe-haven demand, but it's a bit like a repeat of the spring market sell-off, when market participants have been selling assets across the board. It's just a lack of safe-haven buying, which happened after the stock market sell-off, and the stronger dollar is another weakening factor. "
Tai Wong, head of base prices and precious metal derivatives trading at BMO, said: "the chances of Congress agreeing on any stimulus package by January are close to zero. Gold needs to rebound and close above $1900 in the short term, but it looks like we may have to test the pullback low of $1863 at some point in the near future. "
Powell made his debut again.
Beijing 22nd Thursday, Federal Reserve Chairman Colin Powell and US Treasury Secretary Nuchin will attend the Senate Finance Committee hearing to report on novel coronavirus's epidemic assistance and other issues. This is also the third day in a row that Powell has made his debut.
Federal Reserve Chairman Colin Powell (Jerome Powell) told a congressional panel on Tuesday that although the US economy has "significantly improved" since the novel coronavirus pandemic plunged the economy into recession, the future is still uncertain and the Fed will do more if necessary.
Federal Reserve Chairman Colin Powell told Congress on Wednesday that further fiscal stimulus measures are needed if the U.S. economy is to continue to recover. Powell said: "We have made great progress very quickly, which is good." But there's still a long way to go. So what I'm trying to say is that we all have to stick to it. If there is support from Congress and the Federal Reserve, the recovery will be faster. "
When members of the US Congress questioned whether the Fed's action was helping ordinary Americans or the market, Powell said: "our action is not aimed at alleviating the pain on Wall Street. We have basically done everything we can think of. Of course we are looking to do more."
"We all know that viruses do not live in a vacuum and what you see in one country or region can affect other places," said Minh Trang, a senior foreign exchange trader at (Silicon Valley Bank), a Silicon Valley bank. Economically, this could have an impact. Usually, when there are some concerns and unknown factors in the market, investors will use the US dollar as a temporary safe haven. "
In addition to comments by Fed officials, safe-haven buying triggered by a rise in novel coronavirus infection in Europe led to restrictions and concerns over weak European economic data also pushed the dollar higher.
The dollar index closed at 94.37 on Wednesday, up 0.41%, with an intraday high of 94.44, an eight-week high. The dollar index hovered around 94.40 in Asian trading on Thursday.
In addition, the lack of progress in reaching a fiscal stimulus deal in Washington has worried investors about the outlook for the US economy, which has also pushed the dollar higher.
David Meger, head of metals trading at High Ridge Futures, said the death of Justice Ginsburg was expected to create more divisions between Democrats and Republicans, reducing the likelihood of an economic stimulus package.
Brendan McKenna, foreign exchange strategist at Wells Fargo, said: "the safe haven status of the dollar is in full play, and if the stock market continues to fluctuate or plummet, the dollar may show strength."
Ben Randol, senior foreign exchange strategist at Bank of America Securities in New York, said: "the market continues to re-evaluate its previous very optimistic position on the global risk situation. The news about the virus and economic growth has always been negative. "
Randol also quoted Fed officials as saying that the tone was not as dovish as the market had expected. Chicago Federal Reserve Chairman Evans proposed the idea of raising interest rates on Tuesday, causing investors to turn to the dollar as a safe haven. Then, Federal Reserve Vice Chairman Clarida said on Wednesday that policymakers "won't even start thinking about raising interest rates" until inflation reaches 2%.
Randol said Clarida's comments "imply that the Fed still reserves the right to raise interest rates early if it thinks inflation will be a problem."
On Wednesday, the Fed promised to keep interest rates close to zero until inflation moderately exceeds its 2 per cent target "for some time". However, the Fed also said it expected the economy to recover faster than previously expected and the unemployment rate to fall faster than expected in June.
Fed officials' forecasts suggest that interest rates are likely to remain near zero until 2023. In addition, the Fed now thinks US GDP will fall by 3.7 per cent in 2020, better than the 6.5 per cent decline forecast in June.
In a post-meeting statement last week, the Federal Open Market Committee ((FOMC)) said: "as inflation continues to fall below this long-term target, the committee's goal is to achieve inflation of just over 2 per cent over a period of time so that the long-term average inflation rate reaches 2 per cent and long-term inflation expectations remain at 2 per cent. The Committee hopes to maintain a loose monetary policy position until these results are achieved. "
"if Powell and other Fed spokesmen don't add more to the Fed's plan to achieve an average inflation rate of 2%, I can see the dollar rise even higher this week," said Erik Bregar, head of foreign exchange strategy at the Bank of Canada.
The latest news on the situation in the Taiwan Strait! Taiwan officials have confirmed that there are more PLA aircraft operating in the airspace around Taiwan.
According to Taiwan media reports, Taiwan's defense department released news that PLA aircraft entered the airspace of southwestern Taiwan again on September 23. This is also the sixth time that PLA aircraft have flown in the airspace around Taiwan in seven days.
Taiwan's Freedom Times reported that Chinese PLA military aircraft re-entered the southwest corner of Taiwan's air defense identification zone on the 23rd. According to information released by the defense department, two Yun-8 anti-submarine aircraft of the Chinese people's Liberation Army entered Taiwan's air defense identification zone from the airspace south of the southernmost endpoint of the central line of the Taiwan Strait on the 23rd, with a path similar to that of a few days ago.
Like the measures taken in the past, the Taiwan military urgently took off fighter planes to respond, and used anti-aircraft missiles to track and monitor PLA aircraft. Taiwan's defense department also released photos of one of the PLA Yun-8 anti-submarine aircraft taken by the Taiwan military.
The Liberty Times reported that Taiwan's defense department established a "real-time military dynamics" zone on its official website on September 17 this year to publish developments in the sea and air around Taiwan. According to the records of this area, as of the 23rd, only 20 days had no record of PLA aircraft operating in the airspace around Taiwan. In other words, PLA aircraft have been operating in the airspace around Taiwan for six days so far on 17 September.
According to the information recorded by the "Real time military Trends" of Taiwan's defense department, two PLA military aircraft entered Taiwan's southwest airspace every day on the 17th, 21st, and 22nd. On the 18th and 19th, 18 and 19 PLA military aircraft appeared in the airspace near Taiwan, some of which crossed the so-called "middle line of the Taiwan Strait."
At a regular press conference held by the Chinese Foreign Ministry on September 21, Chinese Foreign Ministry spokesman Wang Wenbin responded to the allegation that PLA warplanes were flying over Taiwan's "middle line of the Taiwan Strait," saying that Taiwan is an inalienable part of Chinese territory and that there is no so-called "middle line of the Taiwan Strait." In this regard, the Taiwan media said that this should be a direct and public statement rarely made by the authorities for many years, and that in the future, mainland military aircraft, ships, and even civilian fishing boats frequently crossing the "middle line of the Taiwan Strait" may become the norm.
Taiwan's United News Network reported on September 22 that when Li Jie, former head of Taiwan's defense department, was preparing inquiries in Taiwan's legislature in May 2004, he announced for the first time the exact coordinates of the "middle line" as evidence for the activities of the two sides of the strait in their respective areas.
Taiwan said on Monday that its armed forces had the right to defend themselves and fight back in the event of "harassment and threats", according to reports on Monday. This is obviously a warning to mainland China.
Tensions between Taipei and Beijing have risen sharply in recent months. Beijing claims Taiwan as its territory and uses force if necessary.
Taiwan's defence ministry said in a statement that it had "clearly defined" procedures for Taiwan's first reaction in the face of "frequent harassment and threats from enemy warships and aircraft this year". Taiwan's defense department said that Taiwan has the right to "defend itself and fight back" and follow the policy of "avoiding escalation of conflicts and not triggering incidents." Taiwan will not stir up trouble, but it is also "not afraid of the enemy", the statement added.
Increased US support for Taiwan has angered China, including two visits by senior US officials in a few months, one by Health Secretary Azar (Alex Azar) in August and the other by (Keith Krach), the State Department's economic affairs minister, last week. The United States has no formal diplomatic relations with Taiwan, but Taiwan's most powerful international supporter. The United States is also planning to sell new large-scale weapons to Taiwan.
China held a rare large-scale military exercise near Taiwan this month, which Taipei called a serious provocation. China says the exercise is necessary to protect its sovereignty.
On Friday, US Secretary of State Pompeo (Mike Pompeo) criticized China's "military roar". "We sent a delegation to a funeral and the Chinese side obviously responded with a roar of force," Mr Pengpeo said. " On September 17, Wang Wenbin, spokesman of the Chinese Ministry of Foreign Affairs, responded to Crutch's visit to Taiwan, saying that China firmly opposes any form of official exchanges between the United States and Taiwan, and that this position is consistent and clear. He also said that "China will make the necessary response in the light of the development of the situation."
Senior Colonel Ren Guoqiang, spokesman of the Chinese Ministry of National Defense, said on September 18 that starting from the 18th, the eastern theater of the Chinese people's Liberation Army will organize actual combat exercises near the Taiwan Strait. Ren Guoqiang said that the exercise is a legitimate and necessary action taken in response to the current situation in the Taiwan Strait and safeguarding national sovereignty and territorial integrity.
Senior Colonel Zhang Chunhui, spokesman for the eastern theater of the people's Liberation Army, said on the 18th that recently, the eastern theater of the Chinese people's Liberation Army has organized sea and air forces to conduct combat readiness police patrols and joint sea-air exercises in the Taiwan Strait to test the level of integrated joint operations of multiple services and arms. The relevant action is a necessary measure to deal with the current situation in the Taiwan Strait and is conducive to improving the ability of the forces in the theater to safeguard national unity and territorial sovereignty and security. The theater troops resolutely perform their duties and missions and are confident and determined to thwart anyone or any force in planning and implementing "Taiwan independence" separatist activities in any form.