On Monday (August 17) in the Asian session, the DOLLAR index continued to come under pressure, the latest index fell below 93; Spot gold has rebounded sharply from intraday lows, with gold now trading above $1,940 an ounce and briefly falling below $1,930 in early Asian trading. Investors will continue to watch developments in the U.S. and China this week after President Donald Trump hinted over the weekend that he would take action against more Chinese tech companies. Investors will need to keep an eye on news this week, following the failure to hold trade talks with China over the weekend. In addition to the US-China situation, the current china-India situation is also in the spotlight. Last week, Chinese Foreign Minister Wang Yi made a rare visit to Tibet and delivered an important message to India on the border dispute.
Gold suffered its biggest weekly drop since March last week as some investors took profits and talks on a U.S. stimulus package aimed at helping the covid-19 hit economy stalled. Gold ended the week down 90.94 dollars, or 4.47 percent.
According to Kitco’s Weekly Gold Survey, released Friday, gold is on track for further gains this week, after adjusting for prices, with Wall Street participants expecting higher prices this week.
Wall Street analysts are clearly bullish on gold and expect prices to climb this week, according to the latest Weekly Gold survey. Of the 13 Wall Street professionals surveyed, eight (61.5 per cent) believe gold will rise; Two others (15.4%) expect prices to fall; The bottom three (23.1%) forecast a neutral move in prices.
“The macro environment is still very positive for gold,” said Kevin Grady, President of Phoenix Futures and Options LLC in San Francisco.
“Nothing has changed,” Grady said. All the reasons for gold’s rise remain valid – the huge liquidity provided by central Banks and the low interest rate environment. We haven’t seen a significant unwinding of open positions, which is a sign of bullish sentiment. It shows me that these people are in it for the long haul and are not going to be driven out, at least not at current prices, “he said.
“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.”
Afshin Nabavi, vice President of precious metals trader MKS SA, said gold prices are unlikely to see another major pullback this week. “Psychologically, $1,900 and $1,925 are good supports. Looking up, $2,000 is resistance.”
Still, some continue to bet against gold.
Td securities said there was still room for a further correction given the extremely bullish sentiment for gold, coupled with heavy positioning and speculation.
FX Empire wrote on Friday that gold could test support around $1,660 an ounce again at the end of September, which would provide the next buying opportunity.
Investors will continue to focus this week on the U.S. fiscal stimulus package and the situation in China and the U.S., both of which could trigger some major moves.
“The stimulus package is an issue of concern,” said Daniel Ghali, commodity strategist at TD Securities in New York. The reality is that the Senate won’t be in session for some time, and it may take some time to pass. This is a negative for sentiment and for gold at the moment.”
“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.
Phillip Streible, chief market strategist for Blue Line futures, said once an agreement is reached, it will ultimately be negative for the dollar and positive for gold.
In china-us news, US President Donald Trump said at a press conference on Saturday that he was “investigating” whether Chinese tech giant Alibaba should be banned in the US.
Asked if he was considering banning other Chinese tech companies from operating in the United States in addition to Tiktok and WeChat, trump also referred to huawei, saying he would “not allow huawei” to enter the U.S. market. Mr. Trump said the United States had told other countries to use Huawei, but “we don’t share intelligence,” and he said the United Kingdom had subsequently imposed a ban on huawei.
Mr Trump also said the US was looking at other Chinese companies. Asked at the news conference if he was considering banning other Chinese companies like Alibaba, Trump replied: “Well, we’re looking at other things, yes.”
Mr Trump has been pressing Chinese companies, for example by vowing to ban TikTok, a short video app from the US.
On Friday, the US ordered Bytedance to spin off TikTok’s US operations within 90 days, the latest move to increase pressure on the Chinese company over concerns about the security of the personal data it processes.
On the trade front, a meeting scheduled for Saturday to review the first phase of the trade agreement between China and the U.S. will be delayed due to scheduling issues, and no new date has been agreed.
U.S. Trade Representative Robert Lighthizer, Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He were scheduled to meet by video on August 15, six months before the agreement takes effect. A source familiar with the talks said they were delayed because top Communist Party officials continued to meet in Beidaihe.
So far, several key members of Mr. Trump’s economic team have expressed optimism about the trade deal. Trump has said he and U.S. Trade Representative Robert Lighthizer are pleased with China’s recent purchases. Mr Trump reiterated on Saturday that China was buying more American goods, and that it had been buying a lot of things.
George Gero, managing director of Wealth Management at Royal Bank of Canada, said the U.S.-China trade talks were crucial this week and traders were watching some of the news before making any moves.
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.”
Also high on the agenda this week is Wednesday’s release of the minutes of the Federal Reserve’s July meeting. Investors will be paying close attention to any comment on the control of the yield curve.
“The minutes of the July MEETING of the FEDERAL Open Market Committee will be released on Wednesday and any hint that an average inflation target or yield curve control is imminent will be dollar negative,” ing strategists said. On balance, we’re more in favor of the latter point this week, which means the dollar could hit new lows.”
Chinese Foreign Minister Wang Yi has made a rare visit to Tibet to send an important message to India over the border dispute
Chinese Foreign Minister Wang Yi made a rare visit to Tibet on Friday, including a visit to the disputed border region with India, according to the South China Morning Post on Sunday. The three-month military standoff between the two countries continues to drag on with little sign of resolution.
Although a brief statement from China’s foreign ministry on Saturday made no mention of India, Chinese observers said Mr Wang’s border visit was an unusual symbolic gesture.
Diplomatic talks and five rounds of military talks have failed to break the deadlock over the two countries’ long-running border dispute, which has turned into a broad and increasingly bitter dispute over trade, technology, investment and geopolitics.
According to a statement on the ministry’s website, State Councilor and Foreign Minister Wang Yi made a survey in Tibet on August 14 and held discussions with wu Yingjie, party secretary of the Autonomous Region, Qizara, deputy Secretary and chairman of the District Party Committee and other leading comrades.
Wang said the security and stability of Tibet bears on the overall development of the Party and the country. Facing the world change in one hundred and the complex effects of COVID – 19 outbreak, diplomatic front will work together with the comrades of the Tibet autonomous region, seriously implement the new era, the party’s governance in Tibet, tree prison “four consciousness”, “four confidence”, “two maintenance”, make joint efforts to ensure national security and stability in Tibet, in support of Tibet’s opening to the outside world cooperation and promote Tibet’s economic and social development to make due contributions. During the investigation, Wang went to the Xizang border area for a field test
We conducted investigations and studies on poverty alleviation, border infrastructure, and the construction of small health villages. China and India share a long, unmarked border, mostly in Tibet.
Mr. Wang became the first senior central government official to visit the border area since June 15, when the two sides clashed in the deadliest conflict in more than 50 years in the Galewan Valley.
Wang praised Tibet’s achievements under President Xi Jinping, especially in ensuring border security with India.
The South China Morning Post quoted China watchers as saying that very few Chinese foreign ministers have visited Tibet for research, and wang’s visit is unusual. Wang’s visit shows Beijing’s determination to assert its sovereignty in the disputed border areas.
Some experts warn that while China does not want to go to war with India, it must be prepared for all possible scenarios.
Meanwhile, Indian Prime Minister Narendra Modi said on August 15, India’s independence Day, that the country would set up a 1.4-million-strong army to safeguard national security, especially in response to tensions along the border.
“The integrity of India is Paramount to us,” Modi said. What we can do, what our soldiers can do, everyone has seen it in Ladakh.” He was referring to a border clash with Chinese troops in the Ladakh region of the Himalayas on June 15. Twenty Indian soldiers were killed in the clashes as the two sides fought with batons, stones and their bare hands.
Both sides blame each other for the conflict. China and India fought a border war in 1962 and have since sent tens of thousands of troops to the area.