Spot gold plunged again in Asia on Monday, losing ground to around $1,930 after falling back from around 1950. The market is still locked in a stalemate over a new U.S. stimulus bill, while it remains wary of further news from China and the United States. Moreover, investors need to be wary of more volatility as the US election looms.
Event warning! Be alert to new news on China-Us trade
This week, investors need to focus on a few economic data and financial events, and the importance of relatively low, need to be alert to the situation in China and the United States of sudden news.
On Friday, Reuters cited sources familiar with the matter as saying a meeting to review the U.S.-China trade agreement scheduled for August 15 will be postponed. The two sides have not yet agreed on a new date.
A source familiar with the talks said they were delayed because top Communist Party officials continued to meet in Beidaihe.
The source said the delay did not reflect any substantive problems with the trade agreement, adding that “a new date has not been fixed.”
U.S. Trade Representative Robert Lighthizer, U.S. Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu Heyuan are scheduled to meet by video on August 15, six months before the agreement takes effect, according to multiple media reports.
Judging from the current implementation of the agreement, there are still many gaps between China and the established procurement targets.
Ubs, based on the latest Census of U.S. trade data, estimated that U.S. exports to China in the first half of this year amounted to about $33 billion, equivalent to 23% of its full-year target.
The head of the us’s busiest port said In the first year that China may buy less than a third of the us agricultural products it has pledged to buy by 2020, According to Bloomberg.
Gene Seroka, executive director of the Port of Los Angeles, said at a web conference that the first-phase trade agreement created high expectations for the scale of the purchase, a scale never seen by U.S. agricultural producers. So far, what we’ve seen is a demand for $36 billion worth of agricultural products, and it’s probably going to be closer to $10 billion, and there’s a lot of catching up to do in the second half of the year.
Trump administration officials have said they are pleased with the pace of Chinese purchases in recent weeks and have no plans to abandon the trade deal. The agreement also includes some increased access to The Chinese market for U.S. financial services companies, stronger intellectual-property protections and the removal of some agricultural trade barriers.
Mr. Trump said again on Saturday that China was expanding its purchases of American goods, and it has been buying a lot of things.
Eric Kudlow, the White House’s chief economic adviser, said the United States was pleased with the pace at which China had fulfilled the requirements of the first phase of the trade agreement to buy American goods (suggesting that the agreement would pass the review). We have big differences with China on other things, but as far as the first phase of the trade agreement is concerned, we agree.
In addition to the trade situation, the market is also wary of further US moves to block Chinese technology companies.
Asked at a news conference at his Golf club in New Jersey on August 15 whether he would block Alibaba, which is similar in size to Huawei, after banning WeChat and TikTok, Trump said he was “looking at other companies”, including Alibaba. That means Alibaba could follow In the footsteps of Huawei, Tik Tok and WeChat as Washington’s new stalker.
According to Reuters, Trump was asked at a news conference whether he was considering a ban on other specific Chinese companies, such as Alibaba. “We’re looking at other things, yes,” Mr Trump replied.
Mr Trump has been putting pressure on Chinese companies, such as pledging to ban TikTok from the US. The US on Friday ordered TikTok’s parent company Bytedance to spin off TikTok’s US operations within 90 days.
Earlier on the evening of August 6, trump abruptly signed two presidential executive orders banning software developed by two Chinese companies, WeChat and TikTok, within 45 days.
Focus on the new US stimulus bill
Right now, the more pressing issue for markets is surely a new round of US stimulus.
Talks on a “stimulus” package broke down last week, and there are still wide gaps between those who want to spend $3.4 trillion to keep unemployment benefits at $600 a week through January to provide basic protection for the unemployed. The other side thinks that $3.4 trillion is too much and wants to reduce it to $1 trillion. It thinks that continuing to pay $600 a week in unemployment benefits will reduce the incentive for Americans to follow up and reduce it to $200.
Adding to the recent uncertainty, the likelihood of more financial aid has diminished with the House and Senate in recess on Friday and no new talks scheduled with negotiators for U.S. President Donald Trump.
But with negotiations on an aid bill stalled in Congress, Mr. Trump said at a news conference on Friday that he was ready to send money directly to Americans, as well as rent assistance and money to small businesses and state and local governments.
Nancy Pelosi, the Speaker of the House of Representatives, called members of Congress last week to ask them to end their month-long vacation. While the agenda for the recall is a vote on legislation to protect the U.S. Postal Service, market participants will soon be looking for any clues about the highly anticipated COVID-19 stimulus plan after senators wrap up discussions on Thursday.
“The stimulus package is an issue of concern. The reality is that the Senate won’t be in session for some time, and it may take some time to pass. It’s a negative for sentiment and gold right now, “said Daniel Ghali, commodity strategist at TD Securities in New York.
What’s next for gold after the roller-coaster ride?
In a series of uncertain environment, spot gold failed to gain safe haven favor, staged a plunge again on Monday, since the 1950s continued to fall around the 1930 barrier, fell for a time.
“The gold market has been parabolic, so when you see the stimulus talks get bogged down and Treasury yields pick up a little bit, you get a little bit of a pullback,” said David Meger, director of metals trading at High Ridge Futures in New York.
“It’s probably gone a little too far, too fast,” Meger said. “We think the market needs to take a breather and consolidate, and that’s what we’re seeing.”
Agency SP Angel said the gold market is currently trading around $40 in a volatile region and the selling in the past few sessions has been driven by technical factors, profit-taking and a change in investors’ expectations for economic growth.
TD Securities believes the correction is not over. “From ChartVision’s trend model, the momentum signal is 100 per cent bullish on gold, which in the past has tended to follow a long consolidation phase.”
Standard Chartered reports that the long-term trend in the gold market has not changed, with dollar weakness, substantial stimulus and low interest rates all remaining positive factors.
“The rapid rebound in gold prices above $1,900 has convinced many analysts that gold has further to rise,” said Richard Baker, editor of Eureka Miner Report. Gold rebounded from a one-week low of $1,874.2, suggesting more gains lie ahead. It’s not going to be a straight line, but I believe it could be more than $2,200 in 2020.”
Han Tan, market analyst at FXTM, said: “If there is a negative change [in the US fiscal or us-China trade talks], traders could reverse the stock market’s attempts to hit new highs and pave the way for gold to rebound above $2,000.”