International spot gold (13 October), under pressure, high of hit $1925.10 an ounce, short-term slump after dipping below 1920, 1910, 1900 and 1890 four big barrier, because of the international monetary fund (IMF) mixed economic outlook report, combined with the stimulus bill and associated risk of election nears, get a boost dollar surged, once again dominated the market, gold and stocks both under pressure, the golden fall is larger.
The IMF released its latest world economic outlook today, saying it raised its global economic forecast for 2020 as the recession eased in the April-June quarter and the recovery from July to September was stronger than expected. The IMF now expects global output to fall 4.4 per cent by 2020, compared with 5.2 per cent in June
However, the IMF also cut its forecast for emerging markets (excluding China), noting that those economies face a 5.7 per cent contraction this year, worse than the 5 per cent forecast four months ago. The IMF also expects a slower recovery in 2021 than previously expected, with world growth forecast to fall from 5.4 per cent to 5.2 per cent next year.
At the same time, the outbreak in many parts of Europe and the United States has again raised concerns. Since the discovery of two asymptomatic infected people at the end of September, the situation in Qingdao, China, which had been stable for several days, has changed again in the past two days. On October 11, the Qingdao Municipal Health Commission announced that three new asymptomatic coVID-19 cases had been reported in Qingdao. After epidemiological investigation, the expert group preliminarily concluded that the above three asymptomatic infected persons were related to the Chest Hospital of The City, and some independent areas of the hospital were tasked with the task of importing novel Coronavirus infected persons from abroad. The specific source of infection is being further investigated.
The combination of these factors has spurred a renewed rally in the DOLLAR index, sending stocks and gold tumbling in tandem once again.
On the geopolitical front, following reports last month that the United States would sell seven weapons systems to Taiwan, Reuters reported on October 12 that the U.S. State Department had approved the sale of three of the weapons. The U.S. Congress will review individual arms sales, and no one is expected to oppose them.
In an emailed response to Reuters, the Chinese embassy in Washington said Beijing had called on Washington to halt arms sales to Taiwan and military ties with the island, as such moves seriously hurt u.s.-China relations and peace and stability across the Taiwan Strait. “China consistently and firmly opposes U.S. arms sales to Taiwan and firmly believes that we have the right to defend China’s sovereignty and security,” a representative of the Chinese Embassy in Washington wrote.
Continued tensions between China and the US have created a lot of safe-haven demand, but in the current complex environment, this demand is mainly reflected in the higher us dollar, has not provided enough support for gold.
On the other hand, while geopolitical tensions have given gold some support, the metal is keeping a close eye on the latest U.S. stimulus package. But signs that negotiations on Capitol Hill could stall again have prompted the Trump administration to call for congress to pass a streamlined coronavirus relief bill. A White House spokesman said On Monday that Senate Republicans would agree with President Donald Trump’s position on a bill to fight the epidemic.
Technically, the hour-chart shows gold falling from $1933 to $1918, forming a bullish flag. A breakout above the bullish flag would restore the rally since the Oct. 8 low of $1,881 to $1,980.
If gold effectively breaks through the $1890 level, the lower $1848 level hit on September 24 will be the first target, and further declines are expected to test the $1800 or even $1760 level.
JP Morgan says a victory for Democratic Joe Biden in the upcoming U.S. presidential election would be good for gold, and investors could flock to junk bonds. The bank reported that a Biden election would lead to a knee-jerk drop in Treasury yields and a weaker dollar, thus boosting gold prices.
Phillip Streible, chief market strategist at Blue Line Futures, said: “One day we were talking about trillions of dollars of stimulus, the next day it’s hundreds of billions of dollars, the next day it could be tens of billions of dollars. As we approach the election, it seems to be getting smaller and smaller.”