The price of gold first weakens and then stabilizes when the dollar weakens and is now in a relatively narrow range between $1768 and $1790. The weak data on initial jobless claims in the United States dealt a severe blow to the trend of the dollar and Treasury yields, and investors also retracted their previous bullish view of risky assets. Coupled with the fact that the Fed's low interest rates are moving passively, the US economic recovery will be challenged in the short term, which will continue to support the gold price rally and recover the heavy pressure of the recent sell-off.
As of 08:14 Hong Kong time before the press deadline, gold fell 0.21 per cent to US $1771.60.
Fundamentals Analysis: weak US unemployment data and strong US Dollar fall
Looking at US data, the number of Americans applying for unemployment benefits for the first time rose unexpectedly last week. First-time joblessness rose to 861000 in the week ended Feb. 13, up from 848000 the previous week, the highest level in a month, higher than the expected 773000, and the previous figure was sharply revised up, according to Bloomberg.
Although the US labour market has shown a steady recovery, additional novel coronavirus fiscal measures and fewer novel coronavirus cases have led to the reopening of more services, but due to the real presentation of unemployment data, investors' appetite for risky assets has declined. The dollar and Treasury yields took a respite this week, helping to halt volatility in gold prices. The MSCI global stock index, IACWI, fell 0.79% to 677.28. The index hit a record high of 687.26 on Tuesday before wiping out gains. As Treasury yields rise, confidence in a weaker dollar has been shaken and net short positions have fallen in recent weeks.
Analysis of fundamentals: minutes of FOMC meeting come back into view the passive development of Fed interest rates
A review of the minutes of the (FOMC) meeting of the Federal Open Market Committee, which guided gold price risk, reflects a significantly more optimistic outlook for 2021 than the forecast made in December. Policy makers believe the pace of economic activity and job recovery has slowed in recent months, according to the minutes of the January 26-27 meeting.
Analysts at TD Securities put forward the interest rate view according to the minutes of the FOMC meeting, saying: "after months of pause in the US economy, real interest rates are now moving in the direction of threatening risky assets, which is the nature of the balancing action taken by the Fed." The Fed is testing the interest rate market, which is likely to prompt investors to see a market with suddenly soaring valuations that will eventually challenge the Fed's determination to remain passive rather than active. "
They also point out that in this sense, they suspect that the Fed will exert pressure in a short period of time to oppose the taper discussion. But at the same time, the rise in real yields lowered the gold price below the several-month standard and gained long-term support. At a time when the positioning of gold is still unclear and investment options are crowded, it is too weak to get rid of the obstacles in the gold market.
Fundamental analysis: the dispute between China and the United States has not yet settled. Biden's new administration takes a tough stance.
U.S. president Joe Biden continues former President Donald Trump's attitude toward the Asia-Pacific region, expressing his support for Taiwan's defense affairs. In his first phone call with Chinese President Xi Jinping after taking office, he confirmed his commitment to Taiwan and later told reporters: "I am also worried about Beijing's economic actions, human rights violations and threats to Taiwan. I made it clear to him that I will cooperate with China only when it benefits the American people. "
The U.S. House of Representatives has proposed a bipartisan bill to ban imports of goods from China's Xinjiang region unless it can be proved that the goods are not produced by forced labor and allow further sanctions against Chinese officials responsible for mistreating Muslims. The House bill would authorize the President of the United States to impose sanctions on anyone responsible for trafficking in Xinjiang Uighurs or other Muslim workers. Xinjiang is a major producer of cotton and cotton products. It will also require US-listed companies to disclose their finances with Chinese companies and entities involved in irregularities, a provision not included in the Senate version.
Technical analysis:
Before the outbreak of novel coronavirus, the high price of gold was about 1700 US dollars, and the price of gold is now getting closer and closer to that standard. Given the loose policy of the United States during the novel coronavirus epidemic, printing more than $1 trillion a month and prices close to $1700 to $1765 would be a huge support level. AG Thorson, an analyst at FX Empire, pointed out that the bullish reading for gold prices in the next few days is zero, and any regional purchase near novel coronavirus's pre-epidemic high will be seen as a long-term buying opportunity.
