Spot gold accelerated its slide in Asian trading on Thursday, falling 0.97% on the day to trade at $1,939.71 an ounce, below the $1,940 mark. Silver, meanwhile, was down 1.24 percent on the day at $26.78 an ounce. Spot gold closed at $1955.20 an ounce, up $15.51, or 0.80 percent, after touching as low as $1936.79 and as high as $1962.20.
At 10:51 am Beijing time on Thursday, the Bank of Japan said it would keep its benchmark interest rate unchanged at -0.1 per cent, in line with market expectations, while keeping its target for 10-year bond yields unchanged near 0 per cent, in line with market expectations. The bank of Japan took a slightly more upbeat view on the economy than in July, suggesting no immediate expansion of stimulus to combat the coVID-19 pandemic, but warned of risks to the economic outlook and reiterated its readiness to step up monetary support “without hesitation” if Japan’s recovery falds. Bank of Japan Governor Haruhiko Kuroda is expected to explain the policy decision at a news conference.
At 2 a.m. Beijing time Thursday, the Federal Reserve announced its interest rate decision as scheduled. The Federal Reserve said it would leave the benchmark federal funds rate unchanged at 0-0.25%, in line with market expectations. The Fed has pledged to keep interest rates near zero and to keep them there until inflation continues to rise. Fed officials’ forecasts also suggest that interest rates are likely to remain near zero until 2023. All but four members said they believed interest rates would remain at zero. This is the first time the committee has forecast the economic outlook for 2023.
Short-term volatility in financial markets increased after the Fed’s decision: the DOLLAR index.DXY slipped to 92.85 in the short term before jumping to 93.18 before retreating again from its high. Spot gold rose to $19,699.12 an ounce in the short term before falling sharply from a high to $19,544.84 before recovering from its lows. COMEX’s most active gold futures contract traded 4,222 lots in two minutes between 02:00 and 02:01 Beijing time, with contracts worth more than $829 million.
As for the outlook for gold and silver, Former Goldman Sachs chairman and CEO Lloyd Blankfein said Wednesday that if ever there was an environment for gold and silver to do well, it is now. In an online conversation with the CME Group, the prominent banking executive and commodities trader acknowledged that gold and silver had performed impressively so far this year. Blankfein said he was generally bullish on commodities because he saw the risk of higher inflation and because the Fed had signaled it would not raise interest rates any time soon.
In July, Commodities analysts at Goldman Sachs said they expected gold to rise to $2,300 and silver to $30 within 12 months as governments held down their currencies. “A sustained fall in real interest rates relative to nominal rates has led to a break-through in inflation, which would normally be seen as deflation,” the analysts said. The irony is that the greater the deflation fear that policymakers must deal with now, the greater the debt build-up and the higher the inflation risk in the future.”
Fundamentals positive factors:
1.According to world real-time statistics, as of 7:29 PM Beijing time on September 17, the cumulative number of confirmed cases of COVID-19 worldwide has exceeded 30 million, reaching 30,000,507, and the cumulative number of deaths has exceeded 944,000,210. The United States has the highest cumulative number of confirmed COVID-19 cases in the world, with more than 6.82 million cases to 6,825,602. The cumulative number of deaths has exceeded 201,000, reaching 201,266. US President Donald Trump confirmed on Wednesday that a White House staffer had tested positive for coronavirus in the past 24 hours, but said he had had no contact with the person, the Hill reported. “I heard about it for the first time last night, [but] it’s a small number of cases,” Trump told reporters at a White House press conference on Tuesday when asked about the number of positive cases the White House has tested positive for the new corona-virus.
- The U.S. Justice Department indicted five Chinese nationals on Wednesday for allegedly hacking into more than 100 companies around the world through computers. Two Malaysian nationals have also been charged with the alleged conspiracy. Two Malaysians have been arrested by local law enforcement and five Chinese nationals are believed to be in China. The defendants are accused of stealing source code, user data, and important business information, as well as using ransomware to extort money from victims, according to three DOJ indictments. More than 100 companies around the world, including software developers, computer hardware developers, telecommunications companies, social media companies, computer games, and other companies, as well as non-profit organizations, universities, think tanks, foreign governments, and pro-democracy politicians and activists in Hong Kong, were targeted by these attacks.
- The US is offering to sell Taiwan up to seven major weapons systems, including mines, cruise missiles, and unmanned aerial vehicles, according to four people familiar with the matter. That suggests the Trump administration is stepping up the pressure on China. According to the report, the US arms sales of seven weapons to Taiwan at the same time are a rare departure from the usual us arms sales to Taiwan over the years. Us arms sales to Taiwan have previously been conducted separately and carefully calibrated to minimize tensions with Beijing. But the Trump administration is becoming more aggressive toward China in 2020, and the sale comes at a time when relations between Beijing and Washington are at their lowest point in decades, due to espionage allegations, a protracted trade war, and a controversy over novel Coronavirus.
- On Wednesday, Chinese Foreign Ministry spokesman Wang Wenbin said China was not responsible for the recent border incident between China and India. The Indian side violated the agreement and important consensus between the two sides. First, it illegally crossed the border and provoked, unilaterally changed the status quo in the border areas and posed a threat to the security of China’s border forces. China’s statement came after Indian Defence Minister Manmohan Singh told parliament on Tuesday that India had made clear to China that it would protect its “sovereignty and territorial integrity” at any cost, even if it wanted to resolve the impasse.
Fundamentals negative factors:
- Given that it will take some time for average inflation to reach above the Fed’s target of 2%, calls for more fed action are likely to grow. “The Fed may have a new toolbox to align its policy tools with the average inflation target framework, but it still does not have the right tools to do the job,” Kerry Craig, global market strategist at JPMorgan, wrote in a note. The Fed reaffirmed its commitment to the current pace of bond purchases, which may increase in size but will probably have only a small impact on further declines in borrowing costs. Meanwhile, the concept of yield curve control has been pushed aside for now but could come back to the table in the future. Rising US trade and fiscal deficits and falling real yields should help the “relative attractiveness” of emerging markets and Asian equities.
- The Commerce Department “does not intend to take action against individuals or groups that communicate solely using WeChat and can use or download the application to communicate personal or business information between users,” according to a government filing Wednesday. The company also said the users would not be held “criminally or civilly liable”. The government document said that using and downloading the app for communications would not be prohibited, although the ban could “directly or indirectly harm” the transmission of information on the app. The move follows President trump’s order to list WeChat and TikTok as a so-called national security threat and give the Commerce Department until September 20 to draft specific measures to block “transactions” between them and the Chinese owners of the apps.
- The United States Department of Defense and the Federal Agency of Health have announced the novel Coronavirus vaccine plan, which includes a vaccine free of charge for all Americans. The plan reportedly came in the form of reports to Congress and “manuals” for state and local governments. Authorities are seeking to start the vaccination campaign in January, but it could still be ready by the end of this year. “We are working closely with state and local public health partners to ensure That Americans can get a vaccine as quickly and confidently as possible,” U.S. Health and Human Services Secretary Alex Azar said in a statement. Vaccination efforts will begin gradually among certain groups of people, such as health care workers, other basic workers, and the more vulnerable, and eventually be scaled up to all those who want to be vaccinated, the report said.