Financial Markets Daily

In Asia on Wednesday, spot gold was trading around $1990 after the previous day’s rally, while silver came under a bit of pressure and hovered around $27.50.

The gold market is now waiting for the Minutes of the Fed’s meeting later today, scheduled to be released at 02:00 am Thursday Beijing time, for any hint of an expected shift in the policy outlook.

There is widespread speculation that the Fed will adopt an average inflation target, seeking to push inflation above 2 per cent for some time to make up for years of inflation below 2 per cent.

In addition to the Fed minutes, markets were on alert for new news on the SITUATION in The US and China. Now the conflict between China and the United States has opened up another front, with The United States urging university funds to purge Chinese stocks.

The State Department on Tuesday sent a letter to colleges urging them to eliminate Chinese shares from their educational funds because of the potential risk of their shares being delisted by the end of next year.

“The U.S. College board is cautiously stripping Chinese companies from their endowments as higher U.S. listing standards are likely to lead to a major delisting of Chinese companies by the end of next year,” Bloomberg quoted Keith Krach, deputy secretary for economic growth, energy and environment, as saying in a letter to the boards of Trustees.

“Because Chinese companies have to restate their finances, owning Chinese stocks will expose schools to higher risk,” he said.

The State Department also warned universities of China’s growing influence on campuses and said the US was accelerating investigations into illegal Chinese funding of research, intellectual property theft and talent recruitment.

According to the survey, college funds have invested billions of dollars in Chinese stocks. As of June 2019, overseas holdings in $1 billion-plus college funds accounted for 13.9% of their investments, according to the National Association of College and University Business Executives.

The move follows an earlier announcement by U.S. Treasury Secretary Steven Mnuchin that any company listed on a U.S. exchange that does not comply with U.S. accounting rules will be delisted by the end of 2021.

The report said the administration’s warning about university endowments opens a new front for Trump against the Chinese government, companies and individuals. According to a 2019 Bloomberg survey, U.S. university and college funds have invested billions of dollars in Chinese companies, driven largely by returns on favored Chinese stocks.

Technical analysis:

The dollar

On the daily chart, the dollar index.DXY continued to come under pressure after a five-day losing streak, trading around 92.30 on the day, having touched a 27-month low yesterday. Daily chart MACD red kinetic energy column gradually weakened and nearly disappeared, KDJ random indicator downward close to oversold level, indicating that the next may continue to decline.

On the 4-hour chart, the USD index appears to be forming downward moving highs and lows, watching to see if the 92 level can be held. The MACD green momentum column was largely stable, with the KDJ random index trading within oversold levels, indicating the dollar bearish momentum is firm, short term or continue to consolidate.

gold

On the daily chart, gold was trading around $1990 after a two-day rally, with an eye on whether it could close above $2,000. The daily chart MACD green momentum column gradually weakened, with the KDJ random index trading around 50, indicating lower bearish momentum for gold and further consolidation.

In the 4-hour chart, gold rallied from a low of $1,862 to a new high of $2,015, with the focus on whether it could hold its 60-session average. The MACD red momentum column weakened, with KDJ stochastic trying to move down from the overbought level, indicating less bullish gold momentum, short term or further consolidation.

silver

On the daily chart, silver surged back yesterday failed to defend $28 and is now trading above the 27 mark. The daily MACD green momentum column is very weak, with the KDJ stochastic hovering above the 50 level, indicating a lack of bearish momentum or continued consolidation in silver.

On the 4-hour chart, silver appears to be forming a moving high and low, with a focus on whether resistance at 28.45 can be broken through. MACD red momentum column gradually weakened, KDJ random indicator from overbought level down, indicating silver bullish momentum weakened, short term or further correction.

Fundamentals positive factors:

  1. U.S. President Donald Trump said on Tuesday that he canceled a weekend trade negotiation with China, calling China’s treatment of Novel Coronavirus “unthinkable.”
  2. U.S. Treasury Secretary Steve Mnuchin said, “Five states have been approved to implement President Trump’s unemployment executive order, and it is expected that all will be. Us Democrats want a 4 trillion dollar deal. If it makes sense, there is hope.”
  1. On Monday, the United States announced that it was tightening restrictions on Huawei, adding 38 Huawei entities in 21 countries to its list of export control entities.
  2. Trump is considering banning more Chinese companies following his decision to ban TikTok, according to White House Chief of Staff Kenneth Meadows.

Fundamentals negative factors:

  1. The S&P 500 hit a record closing high on Tuesday, fully recovering from the February novel Coronavirus crisis crash.
  2. Data on Monday showed confidence among U.S. home builders rose for a third straight month in August, tying a record high.
  1. On Monday, White House adviser Navarro said China had kept its word on procurement. On the same day, Wilbur Ross, the US commerce secretary, said China had been buying large quantities of agricultural products. Negotiations between the United States and China continue at different levels.
  2. U.S. retail sales rose less than expected in July as consumers cut back on purchases of motor vehicles. Retail sales are likely to slow further in coming months as the number of new cases spirals and unemployment benefits fall.

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