SMM: spot gold rose slightly in Asia on November 23, and rose 0.24% on November 20, as US Treasury Secretary Nuchin said that negotiations on stimulus measures would continue. In addition, Nuchin also said that the Treasury and Federal Reserve have enough ammunition to continue to support the economy, suggesting that the United States may continue to carry out large-scale fiscal and monetary stimulus policies in the future. This makes gold more attractive as a hedge against inflation. The epidemic in the United States continues to accelerate, and agencies predict that the epidemic has not yet reached its peak. Gold ETF positions rose for the first time after falling on the 7th day in a row.
Spot gold rose slightly during the Asian session on Monday (November 23), and rose 0.24% last Friday (November 20), as US Treasury Secretary Nuchin said that negotiations on stimulus measures would continue. In addition, Nuchin also said that the Treasury and the Federal Reserve have enough ammunition to continue to support the economy, suggesting that the United States may continue to carry out large-scale fiscal and monetary stimulus policies in the future. This makes gold more attractive as a hedge against inflation. The dollar index rose 0.12% on Friday and fell 0.36% on the weekly line. Fed officials reiterated their concerns about the future economic outlook in a public speech last week, promising extreme easing and calling for more fiscal stimulus.
In terms of the epidemic, the epidemic in the United States continues to accelerate, and agencies predict that the epidemic has not yet reached its peak. Gold ETF positions rose for the first time after falling on the 7th day in a row. The focus of the future is still on the negotiation of the stimulus bill, the vaccine and the progress of the epidemic.
Pay attention to the initial figures of Markit manufacturing PMI in European countries in November and the speech made by Bank of England Governor Pele.
The epidemic in the United States continues to accelerate, but it has not yet reached its peak.
According to data, the number of outbreaks in the United States reached 169000 on the 22nd and nearly 200000 on the 21st, setting a new record.
Recently, the growth rate of millions of confirmed cases in the United States has remained high. Since September 25, the total number of cases has exceeded 7 million, and the number of days used for every additional 1 million cases has been reduced from 21 days, 14 days and 10 days to 6 days. At present, the United States is still the country with the most serious novel coronavirus epidemic in the world, with the number of confirmed cases and deaths ranking first in the world, with more than 1/5 of confirmed cases in the world.
The number of hospitalizations in the United States has also surged recently, and the health care system in many places is under unprecedented pressure. According to the latest data released by the project to track the epidemic in the United States launched by the Atlantic, the number of novel coronavirus hospitalized in the United States has exceeded 83000, the highest since the outbreak.
Although the indicators of the recent novel coronavirus epidemic in the United States continue to set new records, the project said that there is no sign that these indicators have reached a "peak."
The endless aggravation of the epidemic in the United States is bound to curb the recovery momentum of the US economy, and safe-haven gold will be favored by more investors, which will also become an important factor affecting gold prices for a long time in the future.
The Minister of Finance calmed the market and boosted the price of gold
"the market should be pleased because we still have enough resources," Mr Nuchin said on CNBC on Friday, a day after calling for the end of several emergency loan programmes.
He also said that he would soon discuss with Senate Majority Leader McConnell and House Republican Leader McCarthy how to deal with House Speaker Pelosi and Senate Democratic Leader Schumer.
Bob Haberkorn, a senior market strategist at RJO Futures, said by phone that gold's rise "is based on his speech, and as long as they can support it, it means there is more money in the system."
David Meger, head of metals trading at High Ridge Futures, said: "the idea that stimulus negotiations will move forward again supports gold prices as we recognise that central bank liquidity and fiscal stimulus measures are still the driving forces behind the gold market."
Nevertheless, gold prices fell for the second week in a row due to a spate of good news from vaccine development. Gold prices have fallen more than 4 per cent since Pfizer and Moderna published positive reports about novel coronavirus's vaccine in the past two weeks. So far this year, gold has mainly benefited from the economic damage caused by the epidemic and the resulting global stimulus measures.
Bank of America said on Friday that investors withdrew $4 billion from the gold market last week, the largest outflow ever, as investors poured into riskier assets.
Nuchin's speech gave enough confidence to the market, which expected the Federal Reserve and the Treasury to continue to carry out stimulus policies during the recession, which enhanced gold's anti-inflationary attractiveness.
The Federal Reserve refunds the remaining funds in emergency loans.
The Federal Reserve said on Friday that it would return unused funds from five emergency lending facilities as requested by the Treasury.
In a letter to Nuchin, Federal Reserve Chairman Colin Powell wrote, "We will make arrangements with you on the return of unused funds to the instruments due at the end of the year in the CARES Act." The letter was posted on the Fed's website.
Powell acknowledged the Treasury's authority in this matter, saying in the letter that the Cares bill "gives the Treasury Secretary the exclusive authority to make specific investments in the Fed's emergency lending facility and is subject to legal restrictions."
In his letter, Powell also raised the possibility of using other Treasury funds to extend at least some of the instruments that will expire on December 31.
Powell wrote, "as you mentioned in your letter, there are non-Cares funds in the Exchange Stability Fund ((ESF)), which, to the extent permitted by law, can be used to provide funds to any Fed lending facility needed to maintain financial stability and support the economy." Many investors have expressed concern that the plans have played a vital role in reassuring markets, diluting optimism that the House and Senate will resume negotiations on the stimulus bill, sending the dollar index back up and gold under pressure.
Gold ETF positions increased for the first time after seven consecutive declines.
ETF positions in gold rose by 2.92 tonnes on Nov. 20, the first increase since ETF's seventh straight decline, indicating that safe-haven demand for gold has rebounded and is still at its lowest level since July 22.
