On Wednesday (August 26) in the Asian session, the DOLLAR index was little changed at around 93.05. Spot gold continued to pull up short – term, now close to 1929 usd/ounce. Gold prices did not take a significant hit yesterday on the news, although the resumption of talks between Chinese and US trade representatives boosted risk appetite. With China still some way from meeting its commitments under the first phase of the agreement, the optimism is unlikely to last, analysts said. In addition to trade issues, there are other areas where relations between the United States and China are under test. In addition to continuing to focus on the U.S. and China, investors are also awaiting a major speech from Federal Reserve Chairman Colin Powell on Thursday.
Senior Chinese and U.S. trade officials reaffirmed their commitment to the first phase of the trade agreement this week. U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin met with Chinese Vice Premier Liu He late Monday local time, the U.S. Trade Representative’s office said in a statement. Both sides have seen progress on trade issues and are committed to making the first phase of the agreement reached in January a success.
On the morning of August 25, Liu He, member of the Political Bureau of the Communist Party of China (CPC) Central Committee, Vice Premier of the State Council and Chinese leader of the China-Us Comprehensive Economic Dialogue, spoke by telephone with US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin at request, according to the website of China’s Ministry of Commerce. The two sides held constructive dialogue on strengthening macroeconomic policy coordination and implementing the first phase of the economic and trade agreement between the two countries. The two sides agreed to create conditions and atmosphere to continue to push forward the implementation of the first phase of the China-Us economic and trade agreement.
A video conference scheduled for August 15 was postponed, with US President Donald Trump saying it was his decision.
White House economic adviser Scott Kudlow said trump administration officials are satisfied that China is implementing the first phase of a trade agreement with the United States after a conference call to review progress on the deal.
“The US comments indicate that they think we will continue to buy from the US, at least until the election,” an agricultural trader at a Chinese state-owned company told Reuters. We will. “We would certainly remain in a position to buy as much as we can, but it’s really hard to say whether we can get there.”
Sushant Gupta, head of research at consulting firm Wood Mackenzie, said China is expected to import more U.S. LIQUEFIED petroleum gas, propane and ethane in the second half of this year to address the petrochemical feedstock shortage, but it is not expected to grow U.S. crude oil imports to levels sufficient to meet phase I targets.
Affected by the coVID-19 outbreak, China has fallen far short of the amount of us products it agreed to buy, but has recently stepped up its purchases of US agricultural products. China has committed to buy $36.5 billion worth of U.S. agricultural products under the first phase of the trade agreement, but after more than half of this year, it is still far behind. U.S. agricultural exports to China were just $7.274 billion in the first half of this year, according to the U.S. Census Bureau.
Us Defense Secretary: Pentagon is ready to deal with China
In an August 24 article in the Wall Street Journal titled ‘The Pentagon is ready for China,’ U.S. Defense Secretary Mark Esper proposed three major measures to counter the threat from the People’s Liberation Army. In a new era of global competition, Mr. Esper writes, the United States feels threatened by Chinese leaders’ positioning of the military and the potential to reshape the international order.
Esper also said China’s actions have prompted the PENTAGON to accelerate the implementation of the National Defense Strategy Report. First, to compete with China for the long term, the United States needs armed forces that can compete, deter and win in all areas of land, sea, air, space and cyberspace. Second, the United States needs to expand and strengthen its network of Allies and partners; Third, the United States needs to continue to build the capacity of its partners.
The PENTAGON sees the modernization of the PLA as a trend the world must study and prepare for, just as the United States and the West studied and responded to the armed forces of the former Soviet Union in the 20th century. The PLA has publicly announced plans to modernize its military by 2035 and become a world-class force by 2049, including a strong Arsenal of conventional missiles and a suite of advanced cyber, space and electronic warfare capabilities. It also includes deploying artificial intelligence. At the end of the article, Esper urges all countries to review and consider cutting ties with the People’s Liberation Army.
Local time on August 5, America’s defence secretary, ace pearl at the Aspen Institute, a think-tank in Washington, the Aspen Institute) to the annual safety BBS video conference, said the pentagon now is the focus of competition from China, the United States not only regards China as rivals in the Pacific Ocean, is the global competition, he want to make sure that the military capabilities of the United States is always in readiness, once must respond, must be overcome.
“China is a rising threat,” Esper said at the time. “I don’t think China’s threat is inevitable, but, whatever the case may be, it’s a fight to be fought, and I want to make sure that the United States is fighting to win and to have an advantage over China in every area.” He pointed out that in the Pentagon’s National Defense Strategy report (NDS), the United States has identified its main strategic competitors, China first and Russia second in order. He also stressed that the United States will strengthen cooperation and coordination with its military Allies.
, a former U.S. trade representative and deputy secretary of state and the World Bank, World Bank President Zoellick (Robert Zoellick) on Monday (August 24) said that relations between Washington and Beijing are dangerous to fall, the two sides is more and more big, the risk for military confrontation and may be a terrible impact on the global order, unless both parties to take a step back, better coexistence.
Mr Zoellick told an event hosted by the Peterson Institute for International Economics on Monday: “The relationship between our two countries is in a state of precipitous decline, and it is quite dangerous. “People need to realize that miscalculation is often possible and that issues related to Taiwan and others could move into more dangerous territory.”
The deteriorating relationship between the two economic giants has led to mutual recrimination and mistrust in areas such as trade, technology, education and the epidemic. This week, Beijing accused the United States of sending a U-2 spy plane into a no-fly zone over China’s live-fire military exercises.
Zhao Lijian, a Chinese foreign ministry spokesman, told a regular news briefing on Monday: “China-us relations are facing current serious difficulties and the responsibility lies entirely with the US side. Some POLITICIANS in the US have unilaterally provoked trouble, taken a series of actions that interfere in China’s internal affairs and harm China’s interests, and made a mad smear campaign against China’s domestic and foreign policies, which has seriously undermined China-Us relations.”
Before Zhao’s statement, US Secretary of State Mike Pompeo said in an interview on Tuesday that the problem lies with the Chinese Communist Party on whether The two countries are in a cold war. The Party does not understand that it cannot engage in predatory economic activity for long if it wants to become a world power and enter the global stage. Pompeo also tweeted that the Chinese Communist Party poses a great threat, but its domination of the world is not inevitable.
Powell’s remarks could spark a new gold rally
Gold prices fell on Tuesday as positive trade news from China and the US undermined their safe-haven appeal, but the losses were limited. Spot gold closed at $1927.81 an ounce, down 55 cents, or 0.03 percent. Spot gold rebounded to around $1,929 an ounce in early Asian trading on Wednesday.
Investors awaited a speech by Fed Chairman Colin Powell on Thursday at the central bank’s annual symposium in Jackson Hole, Wyo., for signs of how far the Central bank will go to deal with the impact of the outbreak.
Powell’s remarks on Thursday could be the next major market driver. The dollar’s main focus this week will be whether Federal Reserve Chairman Colin Powell signals that the Fed will move its inflation target to an average level. That would push inflation higher than it was before the Fed raised rates, which would be further negative for the dollar.
Minh Trang, a senior currency trader at Silicon Valley Bank, said: “The most anticipated conversation will be Powell’s speech on Thursday. People expect there could be subtle changes in how much the Fed is willing to tolerate higher inflation going forward.”
Peter Hug, head of global trading at Kitco Metals, said: “Whenever the Fed chairman speaks, there is a significant movement. Markets are watching to see if Powell is worried and what he thinks about the economy in three months ‘time. If he shows any signs of concern, it could cause major swings. When an event like this happens, many people tend to reduce their long or short positions.”
George Gero, managing director of RBC Wealth Management, said gold’s rally will continue this week and Powell’s speech this week will be one of the most noteworthy events.
Chris Weston, director of Pepperstone Research, said the market will be watching closely any communication about the Fed’s monetary policy review. “The Fed communication panel has indicated that Powell will outline the outcome of the monetary policy review,” Weston said. So this could be a multi-asset volatility event risk.”
Td Securities said Federal Reserve Chairman Colin Powell’s Jackson Hole speech could “revive” precious metals prices. The market is now focused on Powell’s keynote speech at the Jackson Hole conference on Thursday. Mr Dominicanexpects Mr Powell, in effect, to announce the results of a review of the monetary policy framework, recommending the formal adoption of average inflation targeting. Precious metals may be supported by the Fed changing its forward guidance and explicitly proposing inflation above 2 percent.
Standard Chartered precious metals analysts said the long-term outlook for gold remained positive with further dollar weakness, low interest rates and support from additional stimulus measures.
“Covid-19 vaccine developments and improving economic data have put a headwind on the gold market in the short term,” Standard Chartered analyst Suki Cooper said in a note. “However, low and negative interest rates, a weaker dollar, and expectations of further stimulus all weigh on the upside.”
Tuesday’s data showed households worried about the job market and incomes. U.S. consumer confidence fell to its lowest level in more than six years in August.
“Sentiment is deteriorating and that will force Congress to do more stimulus,” said Edward Moya, senior market analyst at OANDA. Because of all the uncertainty… They can’t let all that go for naught, which would reinforce the bullish outlook for gold.”
Central Banks and governments around the world have launched massive monetary and fiscal stimulus to support economies affected by the virus, sending gold prices up more than 25 percent so far this year.