On Friday (March 26), the DXY hovered around 92.80; Spot gold continued to be under pressure, trading at $1,726 an ounce. Analysts said the strong dollar put downward pressure on gold prices. However, geopolitical tensions have provided some support for gold prices. On the news front, US President Joe Biden said in his first press conference since taking office that he does not seek confrontation with China, but that he will not allow China to overtake the US as the world’s leading power during his presidency. In addition, China has recently imposed sanctions on nine people and four entities from the UK. On Friday night in Hong Kong, investors will get a slew of U.S. economic data, with the Federal Reserve’s favorite inflation gauge, the PCE price index, the most closely watched and expected to have an impact on market movements.
Gold fell on Thursday as Treasury yields edged higher and the dollar hit a four-month high, reducing the allure of bullion. Spot gold settled at $1726.89 an ounce, down $7.80, or 0.45 percent.
U.S. economic indicators released Thursday were strong. New claims for state unemployment benefits rose to 684,000 in the week ended March 20, the Labor Department said, the lowest since the week ended March 14, 2020. Meanwhile, US real GDP grew at an annualized rate of 4.3% in Q4 vs. 4.1% exp. & 4.1% last estimate.
Strong economic indicators helped push Treasury yields and the dollar higher. The dollar index touched 92.92, its highest level since Nov. 13, in intraday New York on Thursday. Friday sub-market intraday, the dollar index hovered near 92.80.
Fed Chairman Jerome Powell has hinted at a time when the stimulus measures that boosted markets during the outbreak will begin to be withdrawn. “As we make substantial further progress toward our goals, we will gradually reduce the amount of Treasury securities and mortgage-backed securities that we purchase,” Powell told NPR on Thursday. Over time, very gradually and with a high degree of transparency, we will withdraw the support that we provided during the emergency period when the recovery is almost complete.”
US Treasury yields edged higher as Mr Powell indicated the Fed would eventually scale back its support programme, increasing the opportunity cost of holding gold. The yield on the benchmark 10-year Treasury note rose to 1.63 percent in U.S. trading.
Saxo Bank analyst Ole Hansen said gold needs to break above $1,765 an ounce to attract new momentum.
According to Economies.com, gold tried to break through a key resistance of $1,740.00 / oz on Thursday, but retreated from that level and tested key support at $1,722.00 / oz.
Investors need to be cautious about afternoon trading, Economies.com said. If we lose support at $1,722.00 / oz, this will put pressure on gold and continue the downward trend, with an initial target of $1,700.00 / oz and a further target of $1692.00 / oz.
Economies.com added that a break above $1,740.00 would be a key element for gold to resume its bullish trend, with the next target at $1,765.00 in this case.
Biden: No Confrontation with China China will not be allowed to overtake the United States during his presidency
US President Joe Biden held his first presidential news conference since taking office on March 25. Biden said he did not seek confrontation with China, but demanded that China must abide by international norms and compete fairly. The United States will continue to speak out on issues such as Xinjiang and Hong Kong. It will also hold China accountable on issues such as the South China Sea and Taiwan. Biden said he would not allow China to surpass the United States as the world’s leading power during his presidency.
Mr. Biden said on Thursday that he had made clear to Chinese President Xi Jinping that the United States did not seek confrontation, but would insist that China abide by international rules of fair competition and fair trade. “We do not seek confrontation, even though we know there will be fierce competition,” Biden said. We will insist that China plays by international rules — fair competition, fair practices, fair trade.”
To compete with China, Biden said it would be necessary to increase U.S. investment in labor and scientific research, which he wants to increase from 0.7 percent of GDP today to 2 percent, with big investments in science, medical research, artificial intelligence, quantum, biotechnology and other areas.
Mr. Biden also said he would not allow China to overtake the United States as the world’s leading power during his presidency. “China’s overall goal is to become the leading country in the world, the richest country in the world, the most powerful country in the world,” he said. That’s not going to happen on my watch.” Biden said he would work with Allies to hold China “accountable” for its actions in Taiwan, Hong Kong and the South China Sea.
Before taking office, Mr. Biden did not elaborate on how he planned to deal with China. Many lawmakers from both parties view China as America’s No. 1 adversary.
Biden, who has maintained tariffs on Chinese exports imposed by the Trump administration, had previously said he planned to review the first phase of the trade deal that former President Trump signed with China a year ago. The agreement, signed in early January, calls for China to buy about $200 billion in additional American goods over two years, a commitment that Beijing is far from fulfilling.
Relations with China have deteriorated under Mr Trump, who has made narrowing the trade gap between the US and its Allies a focus of his campaign. Under the deal, the White House slapped 25 percent tariffs on about $250 billion in Chinese goods.
Mr Biden has previously said he wanted to conduct a full review of existing agreements with China and consult with traditional US Allies in Asia and Europe to “develop a coherent strategy” before making any decisions.
“If Treasury yields remain depressed, especially in a risk-averse environment where tensions between China and the United States start to flare up again, gold could rise further,” Stephen Innes, chief global market strategist at financial services firm AAXI, said in a note.
The latest news from China and the UK! The Chinese side imposed sanctions on nine British personnel and four entities
According to the latest information on the website of the Chinese Foreign Ministry on March 26, the British side recently imposed unilateral sanctions on relevant Chinese individuals and entities on the pretext of the so-called human rights issue in Xinjiang based on lies and false information. This blatantly violates international law and basic norms governing international relations, grossly interferes in China’s internal affairs and seriously damages China-UK relations. Foreign Ministry officials have summoned the British ambassador to China to lodge a solemn protest, expressing firm opposition and strong condemnation.
China decided to spread malicious lies and false information of British sanctions nine and four entities, including: tugendhat, Duncan Smith, o ‘brien, orton, lawton, California, and nice Kennedy, finley, and “the Chinese team”, the commission on human rights, “uygur independent courts, Essex garden” big law firm. As of today, relevant personnel and their immediate family members will be banned from entering Hong Kong and Macao, their property in China will be frozen, and Chinese citizens and institutions will be prohibited from doing business with them. China reserves the right to take further measures. China is firmly determined to safeguard its national sovereignty, security and development interests, and warns the UK not to go further down the wrong path. Otherwise, China will make further firm response.
In response, on March 23, Chinese Vice Foreign Minister Qin Gang summoned the British Ambassador to China Caroline Elizabeth Wilson to protest against the UK’s sanctions against China over the human rights issue in Xinjiang.
The Fed’s favorite inflation gauge hits today
At 20:30 Hong Kong time on Friday, the U.S. personal income and spending data for February and the PCE price index, the Fed’s preferred inflation gauge, will be closely watched by investors.
The U.S. personal consumption expenditures price index is expected to rise 1.6 percent on an annual basis in February after rising 1.5 percent, media surveys showed. The core PCE price index is expected to have risen at a 1.5 percent annual rate in February, the same pace as the previous month.