Spot gold continued its intraday retreat on Tuesday, losing $1,900 and briefly touching near 1894 before recovering slightly as markets remained on the sidelines ahead of today’s deadline for the US stimulus package.
Gold fell back yesterday, hitting $1,918 at one point before continuing its downward slide to close near $1,950 but still rallying on a weaker dollar and hopes of a US financial rescue package.
The most critical moment for gold right now is the announcement of the U.S. stimulus package, which comes before Tuesday’s deadline for negotiations.
The focus of the day will be on whether the two parties can reach a deal on a stimulus bill after earlier reports showed progress in talks between House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin. “Differences continue to narrow,” the statement said.
House Speaker Nancy Pelosi (D., Calif.) and Treasury Secretary Steven Mnuchin “continued to narrow their differences” in their discussions On Monday, said House Speaker Drew Hammill, who was hopeful of getting a “clear” message by the end of Tuesday that a new corona-stimulus package is likely to be passed before the November 3 election.
Hammill said Pelosi has instructed house committee chairmen to try to resolve differences with the White House, and that Pelosi and Mnuchin plan to speak again on Tuesday.
Mark Meadows, White House chief of staff, said the new bailout proposal to Democrats had been raised to $1.9 trillion, with an agreement expected by Tuesday. He said President Trump wants a deal, so is willing to provide more money for things like sending money directly and supporting small businesses.
However, the $1.9tn package falls short of the $2.2tn Democrats have already passed in the House of Representatives. It was not immediately clear how the Democrats would respond.
Last week, the White House proposed a $1.8 trillion stimulus package, but Ms. Pelosi rejected it, asking for $2.2 trillion in aid.
Analysts also point out that even if Pelosi and Mnuchin can reach a deal, Senate Republicans will be an obstacle to passing the deal. Most Republican lawmakers support limited spending to deal with the outbreak because they are more optimistic about the economy than Democrats.
Senate Majority Leader Mitch McConnell said a vote on the stimulus bill would be held on Tuesday and Wednesday. About $500 billion, it would renew a small business loan program and provide more unemployment benefits, school aid and money for virus testing.
Gennadiy Goldberg, interest rate strategist at TD Securities in New York, said: “There is some optimism about a possible deal… Some of the optimism seems to have begun to fade, with a realisation that a real stimulus package is likely to come after the election, most likely in early 2021.”
“The lack of stimulus is worrying news, exacerbated by the worsening of the epidemic and pre-election uncertainty,” said Mona Mahajan, U.S. investment strategist at Allianz Global Investors. There is a reasonable possibility that if there is no stimulus before the election, then there will be after whoever wins. As cases [of coVID-19] spike again, stimulus measures will be important.”
On the daily chart, the dollar index.DXY traded in a narrow range after two days of losses and was trading near 93.40. The daily chart MACD green momentum column is very weak, with the KDJ random index holding steady near the 50 level, indicating weak short-term bearish momentum and prices may enter a consolidation phase.
On the 4-hour chart, the DOLLAR index continued to retreat after breaking the 100-period moving average, with the focus on whether 93.20 becomes a short-term low. The MACD green momentum column gradually weakened, with the KDJ random index trading above oversold levels, indicating a slowdown in dollar bearish momentum, short term or further volatility.
On daily charts, gold continues to hover around the $1,900 mark with no clear signal of a breakout. The daily chart MACD red momentum column is weak, with the KDJ random index holding steady near the 50 level, indicating that gold bullish momentum is not strong and is now inclined to consolidate.
The 4-hour chart shows the gold price falling from $1918 to $1898, the 100-period moving average. The MACD red kinetic energy column gradually weakens and almost disappears, and the KDJ random index falls below the 50 level, indicating that the bullish momentum of gold further weakens, and the short-term or volatile downward trend.
On the daily chart, silver follows a narrow, volatile pattern seen in previous days and is trading around $24.50. The daily MACD red momentum column is very weak, with the KDJ random index holding steady above the 50 level, indicating a lack of bullish momentum or further volatility in silver.
The 4-hour chart shows the silver price oscillating between the 100-phase and 200-phase moving averages with no significant breakout signal. The MACD red momentum column remains weak, with the KDJ stochastic moving below the 50 level, indicating weak bullish momentum for silver and short term or further weakness.
Fundamentals positive factors:
1.A spokesman for Pelosi said she and Treasury Secretary Mnuchin “continued to narrow their differences” in their discussions on Monday, with Pelosi hopeful of getting a “clear” message by the end of Tuesday on whether the Corona-stimulus package is likely to be passed before the November 3 election. — Gold is still expected to benefit from the US financial rescue plan.
- The Leader of the Democratic Party In the United States Nancy Pelosi says a phone call with the Treasury Secretary Steven Mnuchin over the weekend made good progress. She was upbeat about the prospects for the talks and set Tuesday as a deadline for a deal on the rescue package before November’s presidential elections. Markets saw it as a sign of progress. — Positive developments in the stimulus package are positive for gold.
- Recently, European countries in the northern Hemisphere are facing severe pressure of epidemic prevention and control again. France has declared a public health emergency. A one-month curfew in nine major cities will affect nearly a third of the population. London is about to enter a second lockdown; Germany has introduced rules to try to reduce infection rates. — Risk aversion triggered by the renewed outbreak in Europe is bullish for gold.
- U.S. President Donald Trump said on Thursday that he had agreed to seek a coVID-19 stimulus package larger than the $1.8 trillion proposed by the White House in order to reach a deal with House Democrats. — Greater stimulus is good for gold.
Fundamentals negative factors:
- Senate Majority Leader Mitch McConnell said Monday that a vote on the stimulus bill would be held Tuesday and Wednesday. About $500 billion, it would renew a small business loan program and provide more unemployment benefits, school aid, and money for virus testing. Smaller stimulus packages are bad for gold.
- Senate Majority Leader Mitch McConnell said On Saturday that a vote on the smaller $500bn stimulus bill would be held on The 20th and 21st, with a separate vote on the Pay Protection Plan bill to bail out small and micro-businesses. Smaller stimulus packages are bad for gold.
- McConnell on Thursday rejected more than $1.8 trillion in stimulus proposals, saying a smaller $500 billion plan was an appropriate response to the outbreak. The $500 billion stimulus package fell far short of market expectations, putting gold in the black.