China’s central bank may offer more stimulus! Gold and silver T+D both fell late Tuesday

Shanghai gold exchange gold T+D closed down 1.63 percent at 349.53 yuan per gram in late trading on Tuesday, with a high of 353.83 yuan per gram and a low of 348.81 yuan per gram. Shanghai gold exchange gold T+D closed down 2.51 yuan, or 0.70 percent, at 353.92 yuan per gram on Tuesday, with the highest bid of 357.08 yuan per gram and the lowest bid of 353.55 yuan per gram. Spot gold opened at $1,576.06 per ounce in Asia on Tuesday morning, testing as low as $1,578.79 per ounce and rising as high as $1,579.30 per ounce to close at $1,552.48, down $24.01, or 1.55%.

Shanghai gold exchange silver T+D closed 0.70 percent lower at 4,233.00 yuan/kg on Tuesday evening, with the highest bid at 4,260.0 yuan/kg and the lowest at 4,227.0 yuan/kg. Shanghai gold exchange silver T+D closed down 24 yuan, or 0.56 percent, at 4260.00 yuan per kilogram on Tuesday, with the highest bid at 4,286 yuan per kilogram and the lowest at 4,244 yuan per kilogram. International spot silver started Tuesday morning at $17.66 an ounce, dipping as low as $17.50 and rising as high as $17.78 to close at $17.57, down 9 cents or 0.58 percent.

Gold extended its losses Tuesday as the dollar strengthened and stocks rose. China’s move to minimize the economic impact of the coronavirus outbreak has spurred investor appetite for risk.

COMEX gold for April delivery ended down $26.9, or 1.7 percent, at $1,555.50 an ounce.

Wall Street rallied strongly on the back of a global recovery as the latest intervention by China’s central bank calmed investor’s nerves.

China’s central bank may cut key lending rates and bank reserve requirements in the coming weeks to support economic growth, according to media reports.

Stocks built on solid gains in the previous session as the market recovered from a sharp sell-off triggered by concerns about the coronavirus.

The dow closed up 407.82 points, or 1.4%, at 28,807.63. The s&p 500 closed up 1.5 percent at 3,297.59. The NASDAQ composite index closed 2.1 percent higher at 9467.97, a record high. The tech-heavy benchmark became the first major index to completely shrug off coronavirus-related concerns.

Moreover, a stronger dollar, once again at the 98 marks, makes gold more expensive for buyers holding other currencies.

However, there is still some uncertainty about the extent of the impact on China and the global economy.

Some traders are also starting to expect a rate cut by June.

In other precious metals, palladium jumped nearly $120 to hit its highest level since January 27 at $2,441.40 an ounce.

“Now that optimism has returned to financial markets, it seems market participants have forgotten their concerns that the spread of coronavirus could affect demand,” analysts at Commerzbank said in a report.

Fundamentals of positive factors

  1. According to Tencent News, as of February 3 at 23:36, a total of 17,345 cases have been confirmed nationwide, 524 cured, 361 dead and 21,558 suspected cases.

2. Data released on Monday showed the monthly rate of U.S. construction spending fell by 0.2 percent in December from an expected 0.5 percent to 0.6 percent. U.S. construction spending unexpectedly fell in December, the first decline since June, as an investment in both private and public projects fell. For all of 2019, U.S. construction spending fell 0.3 percent, the first decline since 2011.

3.U.S. GDP grew 2.1% in the fourth quarter, the same as in the third quarter, and in line with the expectations of economists surveyed by dow Jones. Still, preliminary estimates released by the Commerce Department on Thursday showed the economy expanding at 2.3 percent for the full year, down from 2.9 percent in 2018 and 2.4 percent in 2017, Mr. Trump’s first year in office.

4.U.S. jobless claims for the week ended January 25, released on Thursday, were revised to 223,000 from 211,000, with 216,000 expected.

5.The federal reserve left interest rates unchanged as expected on Wednesday (January 29), offering no new guidance on its balance sheet, but Powell noted that “uncertainties remain in the outlook, including those caused by the new coronavirus.” As fed chairman colin Powell’s remarks continued, traders raised their bets that the central bank would ease policy in 2020. A rate cut would put downward pressure on the dollar index, and gold is expected to get a boost.

Fundamental negative factors:

1. Data released on Tuesday showed U.S. factory orders rose at a 1.8 percent monthly rate in December and were expected to rise 1.2 percent, revised from a 0.7 percent decline.

2. The institute for supply management said on Monday that its manufacturing PMI rose to 50.9 in January, the highest since July, from 47.8 in December. A reading above 50 indicates expansion in manufacturing, which accounts for 11 percent of the U.S. economy. The ISM index has been below 50 for five straight months. Analysts surveyed had expected the index to rise to 48.5 in January from 47.2 in December.

3. The University of Michigan’s consumer confidence index was 99.8 in January, compared with expectations of 99.1 and the previous reading of 99.3, according to data released Friday. U.S. consumer confidence was slightly higher than expected and close to a cyclical peak on the back of a strong job market and strong income growth.

4. Data released on Friday showed the personal consumption expenditure (PCE) price index rose 0.3 percent in December from the previous month, the biggest gain since April. U.S. prices rose 1.6 percent in December from a year earlier, the biggest gain in a year.

5. The conference board’s consumer confidence index for January, released on Tuesday, was 131.6, well above expectations of 128 and above the previous reading of 126.5.

6.Us durable goods orders for December 2019 rose by a better-than-expected 0.3% a month and fell by 2.1%, according to data released on Tuesday.

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