The bear market for gold took a breather near its lowest level since early July as U.S. economic worries and stimulus measures boosted the bull market’s chances of entry. The Brexit vote, China’s November manufacturing PMI and China-Australia trade tensions continue to heat up to accumulate global risk signals. In addition to the new news from the trade war between China and the US, THE US media has pointed out that Chinese company SmIC will be blacklisted, which has contributed to the trend of gold risk.
Fundamental Analysis: The Importance of the Fed and Treasury holding hands with the new coronavirus stimulus
In preparation for testimony before the Senate Banking Committee, Federal Reserve Chairman Colin Powell and Treasury Secretary Steven Nuchin stressed that the U.S. economy is on the road to recovery, but that sustained efforts are still needed. Powell cited moderating economic growth as a reason to worry about undermining hopes for a coVID-12 vaccine, but Nuchin urged the US Congress to use $455 billion of the CARES Act to show the world’s largest economy a badly needed economic boost. The dollar halted its weakest recovery since April 2018, even as two major U.S. comments weighed on risk.
The US Congress kicked off a two-week sprint on Monday to help save the federal government from a possible shutdown during the coVID-19 outbreak. It will be the first big test of whether Republicans and Democrats plan to work together since election Day. The U.S. House of Representatives and Senate will discuss the details of the $1.4 trillion budget and work out a final appropriations bill when almost all federal funding expires on December 11.
If Congress cannot reach a budget deal in its lame-duck session after elections, the new Congress, which convenes in January, will have to lay out a clear course in the weeks leading up to the inauguration of a new President. A lame-duck session of Congress is a session of Congress that occurs during the transition from one President to the next. Mr. Trump has warned that he may oppose a defense authorization bill that would remove the list of allied leaders from military bases. The failure of the Democratic-controlled House and Republican-controlled Senate to pass spending bills could also have dire consequences. At a time when the number of confirmed cases in the US is rising, some health-care facilities may be forced to discontinue because they are understaffed. More than 267,000 people have died of COVID-19 in the United States.
The Democrats’ latest initial budget is $220 billion to help U.S. state and local governments respond to the health and coVID-19 crisis, and expand coVID-19 detection and vaccine supplies, as well as relieve economic pressures on individuals and families during the pandemic. Their aim is to provide a significant stimulus to the US economy, and many experts have raised concerns that if the pandemic prompts more business failures, the economy could hit another low in the coming months. Republicans say the budget is too high and insist on $50 billion in cuts.
So far, there is no sign of serious budget negotiations in Congress, and a stimulus package is widely expected to be a top priority for the new President when he takes office on January 20. U.S. President-elect Joe Biden and his transition team on Monday announced several nominations and appointments to the top economic posts in the new administration, CNBC reported On Monday. The transition team confirmed earlier reports in the U.S. media that former Federal Reserve Chair Janet Yellen would be Biden’s official nominee for Treasury secretary. If confirmed by the Senate, Yellen would become the first woman to lead the U.S. Treasury in its 231-year history.
With global markets still recovering, “an important indicator of the market’s recovery will be to see positions and trading costs remain low,” said John Reade, chief strategist at the World Gold Council.
Fundamental analysis: The trade war between China and the US escalates smIC will be added to China’s blacklist
Before the end of his current term, U.S. President Donald Trump has not given up on his strategy to carry out a trade war with China. Reuters last week quoted documents and sources as saying US President Donald Trump was preparing to place SMIC, China’s largest chipmaker, on a blacklist of companies “linked to military activities”, limiting its access to US investors. Reuters reported in early November that Washington was preparing to identify four Chinese-backed companies, bringing the number of Chinese companies affected to 35. From trump stepped down as the term is less than a few weeks, Reuters quoted a file with the sources referred to again, the United States ready to release the latest wave of “China’s people’s liberation army (PLA) background sanctions list”, are in addition to the list of core, and China national offshore oil, jianke volunteers group and China international engineering consulting firm. It added that it was unclear when the new list would appear on the Federal Register website.
Smic’s subsidiaries and joint ventures in Shanghai, Beijing, Tianjin, Shenzhen, Ningbo and even Italy are among those subject to U.S. government export restrictions, according to a September 18 letter from the U.S. Commerce Department cited by Reuters. Any supplier affected by the export order would have to apply to the US government for an export licence if it wanted to continue supplying SMIC. It is worth noting that in early September, the Pentagon had already warned that it was considering putting SMIC on the US export “blacklist”, citing the risk that its civilian chips could be used for military purposes.
At a press conference on September 28, China’s Foreign Ministry expressed its firm opposition to the US government’s abuse of export controls and other restrictive measures and unreasonable suppression of Chinese companies in response to the export restrictions imposed by the US Department of Commerce on Chinese chip maker SMIC. Chinese Foreign Ministry spokesman Wang Wenbin said China firmly opposes the U.S. government’s efforts to broaden the concept of national security, violate the principles of market economy and fair competition, violate international economic and trade rules, abuse export controls and other restrictive measures, unreasonably suppress Chinese enterprises and undermine the normal international economic and trade order. Wang said China will continue to take necessary measures to safeguard the legitimate rights and interests of Chinese companies.
After rebounding from may highs, gold can take its cue from oversold RSI conditions on daily charts, giving investors more focus on the $1,800 threshold. But a touch near the July 7 high of $1,818 could prompt further gains.