SMM: spot gold fluctuated in a narrow range on Thursday, trading at $1886.43. Pressure on the dollar to boost gold prices on Wednesday as a bipartisan bailout bill for airlines was still likely, boosting market expectations of stimulus.
At the same time, the Fed minutes in Beijing in the early hours of Thursday showed that divisions within the Fed intensified, with some officials open to expanding bond purchases and putting some pressure on the dollar.
In addition, opinion polls show that the market is betting further on Biden to win the election and that Democrats will regain control of the Senate, which could push for larger stimulus measures and support gold.
Overall, the dollar remains the key factor dominating gold in the near term, and the market needs to keep an eye on the stimulus package and the progress of the US election. In the long run, gold is supported by the continued spread of the epidemic as it continues to hit the prospects of a global economic recovery and as central banks are likely to continue to expand stimulus measures to support the economy. However, as the world's central banks became net sellers of gold for the first time in a year and a half in August, and the growth rate of gold ETF positions has slowed significantly recently, suggesting that there has been a short-term shortage of demand for gold after a sharp rise.
Technically, gold has recently failed to break the previous key pressure range of $1900-1920, while the downward trend line above is still under pressure. With a short-term focus on September 16 highs and September 24 lows of $1973.56 and $1848.89, 38.2% of them are at $1925.77, so be aware that there is still room for a pullback in the short term.
Pay attention to the data on US unemployment benefits and the minutes of the European Central Bank's September monetary policy meeting.
Us bipartisan expectations of stimulus are still likely to put pressure on the dollar, but we still need to be wary of insufficient rescue efforts.
U. S. stocks closed sharply higher on Wednesday as investors renewed hopes that the United States might reach at least part of its fiscal stimulus package.
The Dow Jones industrial average closed up 530.7 points, or 1.91%, at 28303.46; the s & p 500 closed up 58.5 points, or 1.74%, at 3419.45; and the Nasdaq index closed up 210.00 points, or 1.88%, at 11364.60.
Trump said Tuesday night that Congress should quickly provide 25 billion dollars in new wage subsidies to help US air passenger companies give thousands of workers temporary leave. At present, under the influence of the pandemic, the number of air travel is still declining sharply.
Earlier on Tuesday, Trump abruptly called off talks with Democrats on the economic aid package, causing the stock market to plummet and stimulating demand for the dollar.
But as House Speaker Pelosi hinted to Treasury Secretary Mnuchin that she was willing to negotiate a bailout bill for the aviation industry alone, it once again changed risk sentiment in the market.
Minh Trang, a senior foreign exchange trader at Silicon Valley Bank, said: "these comments about the option to revive some of the stimulus package have certainly boosted the market and injected more optimism, and you can see that this is why the dollar is weakening today, which is really a" risk-taking "mentality."
Senior White House officials played down the possibility of more novel coronavirus relief plans on Wednesday, but Pelosi asked Treasury Secretary Nuchin on Wednesday to review a separate $25 billion aid bill for airlines.
It is necessary to keep an eye on the progress of the stimulus package in the short term, and it is important to note that while there may still be piecemeal plans from both parties to prop up the economy, Pelosi said that Trump's tweet is intended to remedy "a terrible mistake". She ignored the question of streamlining the aid package and still favoured a comprehensive version.
This means that the two sides will continue to have obvious differences in some other areas, which may once again push up the dollar and put pressure on gold.
The market is betting that Biden wins the election and the Democrats win back the Senate, leading to a bigger stimulus.
Another factor putting pressure on gold prices is the market's expectation that the Democratic Party will win the election, which also puts pressure on the dollar.
The chances of Biden winning the election and Democratic control of Congress are higher, and bond traders expect a bigger fiscal package and faster inflation in the future, according to the poll website.
According to the Fox poll, Biden's approval rating is 53%, 43% ahead of Trump. The latest Ipsos poll conducted Oct. 2-6 found that 38% of adults approve of Trump's response to the epidemic, while 56% disapprove.
"the foreign exchange market is beginning to expect not only Biden to be president of the United States, but also a resounding victory," said Mazen Issa, a senior foreign exchange strategist at TD Securities in New York.
Issa said investors had been shorting the dollar index, adding that "the market sees this as an inflationary effect."
Suki Cooper (Suki Cooper), a precious metals analyst at Standard Chartered Bank, expects gold prices to recover to $2000 an ounce in the fourth quarter of this year and climb to $2100 in the first quarter of next year.
Gold is closely related to the trend of the dollar this year, and this trend is likely to continue. That's why Cooper stressed that Biden's victory was the best for gold.
"at present, the dollar is still the main driver of gold, and in the past six elections, the correlation between gold and the dollar was significantly negative not only in the five weeks before the presidential election, but also during the election," Cooper said. Halfway through the time, this relationship has been strengthened. "
Cooper believes that given the expected fiscal stimulus and tax increases, Biden's victory and the Democrats gaining full control of Congress paint the weakest prospects for the dollar, technology stock returns and US risky assets. Given that gold currently has the highest correlation with the dollar (more than 50 per cent), the dollar's response is key. "
Cooper also pointed out: "in the past six elections. Gold prices have had a mixed response before the election, but historically, gold prices have generally fallen after the Republican victory."
Divisions within the Federal Reserve have intensified, and some officials are open to expanding the scale of bond purchases.
As concerns about whether the US will introduce further stimulus measures to support the virus-hit economy have eased, the focus has shifted to looking for clues about the outlook for monetary policy from the Fed's minutes.
Fed policy makers were divided on how to apply the new monetary policy strategy at the September meeting, at a time of growing doubts about the path of economic development, according to minutes released in Beijing in the early hours of Thursday morning. they did not specify what next steps would be taken to offset the recession triggered by the novel coronavirus epidemic. Discussions have begun to change the Fed's current pace of $120 billion a month in bond purchases, according to the minutes. Some members are open to adjusting or increasing the amount of bond purchases.
Williams, chairman of the New York Fed, said the US economy was "far from" fully healthy and that the outlook was highly uncertain, adding that the Fed's new policy enabled it to respond to changes in circumstances when needed.
Chicago Fed President Evans said the road to economic recovery depends on more financial aid and is now comfortable with the Fed's bond-buying program. But he predicts that inflation will not return to 2 per cent until 2023, after which the Fed needs inflation to rise moderately above that level for a certain period of time to achieve its average 2 per cent target.
Minneapolis Fed Chairman Kashkari joined the ranks of Fed officials calling for more aid from the government. Without further financial assistance, the economic downturn would have been "much more serious", he said.
At the same time, senior economists at the Federal Reserve said that due to the limited space for interest rate policy, the scale of quantitative easing needs to be greatly increased.
As the US stimulus package shifts from a comprehensive bailout to a sporadic bailout, it has added to the policy pressure on the Fed, which had been hoping for more stimulus from Congress to prop up the economy.
According to economic data, US consumer credit fell unexpectedly in August, and credit card balances fell for the sixth month in a row, indicating that the novel coronavirus epidemic continues to limit some consumer spending.
Overall, the Fed's position has taken a further turn, and if the epidemic continues to spread and economic data weaken further, it could strengthen expectations that the Fed will expand its bond purchases, which will further put pressure on the dollar and boost gold prices.
The continued spread of the epidemic continues to hit the prospects for global economic recovery and may force global central banks to expand the scale of stimulus.
Continue to follow the progress of the epidemic, the spread of the global epidemic has not shown signs of a significant slowdown.
The latest data from the Brazilian Ministry of Health show that on the same day, there were 31553 new confirmed cases of COVID-19 in Brazil, with a total of more than 5 million confirmed cases, reaching 5000694. There were 734 new deaths, 148228 deaths and 4391424 cured cases. On the same day, the governor of the Brazilian state of Ceara diagnosed COVID-19.
According to the latest data updated by the French Public Health Bureau, as of 14:00 local time on October 7, there were 653509 confirmed cases in COVID-19, France, with 18746 new cases in the past 24 hours, setting another record for new cases in a single day since the outbreak. Between September 28th and October 4th, the proportion of novel coronavirus in France who tested positive for nucleic acid rose to 9.1%.
According to the latest statistics of novel coronavirus epidemic released by Johns Hopkins University in the United States, as of 17:23 Eastern time on October 7, COVID-19 in the United States had more than 7.53 million confirmed cases, 7538550 cases, and 211532 deaths. Compared with the same time the previous day, there were 53219 new confirmed cases and 895 new deaths in the United States in the past 24 hours.
Fauci, director of the National Institute of Allergy and Infectious Diseases, said on October 6 that the current epidemic in the White House could have been avoided. He also warned again that if the United States fails to comply with the public health guidelines, the death toll of COVID-19 in the United States could reach 30 to 400000 by this winter.
The continued spread of the epidemic will continue to deal a blow to the prospects for global economic recovery.
According to a new survey released by the Yves Institute for Economic Research and the European Center for Economic and Fiscal Policy, a German think-tank, the global economy is expected to contract by 4.4% this year, and only China's economy will achieve positive growth among the major economies. More than 1/3 of the experts surveyed do not expect the global economy to return to its pre-novel coronavirus level until 2022, the report said. Among the world's major economies, only China is expected to achieve positive growth of 2.3% this year, the report said. The US and EU economies are expected to contract by 6.5 per cent and 8.4 per cent respectively this year.
In August, central banks around the world became net sellers of gold for the first time in a year and a half.
In August, central banks became net sellers of gold for the first time in a year and a half, the latest sign that demand for gold is slowing after a record rise.
Central banks around the world sold a net 12.3 tonnes of gold in August, according to the latest estimates released on Wednesday by the World Gold Council ((World gold Council)), an industry support body. The shift comes as gold prices hit an all-time high of more than $2070 an ounce in early August. Since then, gold has fallen more than 8 per cent to $1890 an ounce.
The latest data show that purchases by some major buyers have declined as countries release resources to deal with the epidemic crisis.
Bernard Dach (Bernard Dahdah), an analyst at French foreign trade bank (Natixis) in Paris, said: "all central banks around the world are facing a lot of liquidity pressure. Now is not the time to hoard gold. Hospitals need money. "
Data show that Uzbekistan exported $5.8 billion worth of gold in the first eight months of this year.
Central bank purchases have been a secondary factor in the surge in gold prices this year. The surge in gold prices was led by record demand for gold ETF.
So far in 2020, global investors have invested more than $60 billion in such ETF. But the World Gold Council estimates that central banks still bought between 200and 300tonnes of gold-about $13 billion at current prices.
The sale follows two consecutive years of record gold purchases, including a record in 2018, when central banks bought 651.5 tonnes of gold, the highest level since 1971, as countries such as Russia, Turkey and Kazakhstan tried to shift their foreign exchange reserves from the dollar to other currencies. Last year, central banks around the world bought another 650 tonnes of gold.
Russia's central bank said in March that it would stop buying gold from April. Over the past five years, Russia's central bank has bought about $40 billion of gold.
However, Turkey has increased its holdings of gold, becoming the largest buyer, buying 194 tonnes of gold so far this year, worth about $12.9 billion at current prices. The World Gold Council estimates that gold currently accounts for 49% of its total net reserves.
The rise in gold prices this year has hit demand for physical bullion bars, with sales falling in India and China, traditional buyers of gold. In recent weeks, investment outflows and a stronger dollar have made gold more expensive in other currencies, pulling the market off its highs.
