In the Asian session on Thursday, spot gold continued to rise in the short term, just above $1,950, while silver extended gains to 1 per cent.
Gold plunged from above 1970 to below 1940, dropping $40 or more than 1 per cent on the day as the dollar came under pressure from a strong rebound.
The dollar rose for a second day as investors cut short dollar positions and sold the euro on fears the European Central Bank was nervous about the currency’s rise. The comments came after ECB Chief economist Jens Lien said euro-dollar rates were ‘really important’ for monetary policy, suggesting the ECB could take some action.
Ray Attrill, head of currency strategy at National Australia Bank in Sydney, said the ECB was unlikely to act, but that “Lane’s comments were an excuse for some traders to take profits on long euro positions” that were starting to get a bit too long.
Jason Wong, senior market strategist at BNZ in Hong Kong, said, “You might think (the dollar’s rebound) is a slight reversal of trend. The dollar’s decline has been going on for a long time, but if it’s a bottom, it’s a very short-term bottom.” It is likely to be a temporary interruption. Everyone has good reason to be bearish on the dollar because of the fed’s policy outlook of keeping interest rates exceptionally low for an extended period.
In addition to the dollar trend, gold is still focused on the Situation in China and the United States. The trump administration is discussing the scope and effective date of a ban on Chinese social media app WeChat and short video app TikTok, and will announce it around the 20th of this month, bloomberg said, citing sources.
September 20 was the last day for Mr Trump’s first executive order to set a deadline for TikTok to sell its US operations.
The Commerce Department, which will be in charge of enforcing the ban, is drawing up documents outlining which specific transactions between WeChat and TikTok and U.S. companies will be banned and when they will take effect, people familiar with the matter said.
Sources say the scope and timing of the ban are related. If the U.S. government applied the restrictions to all Tencent transactions, including games, there would be a longer transition period for companies. But if the ban is narrow, the transition period will be short or even non-existent. Mr. Trump also has the final say on whether to extend the ban outside the United States.
While some US officials have told the business community that their operations in China will not be affected, there have been reports of divisions among members of Mr Trump’s cabinet, with the final outcome uncertain.
TikTok’s potential buyers are discussing four acquisition options with Bytedance, including acquiring its U.S. operations without key software, but no decision has been made, Reuters reported, citing sources, citing sources.
As for the outlook for gold, Heraeus Precious Metals said in a report this week that the gold market still has a lot of upside, with a forecast of $2,200 an ounce by the end of the year. Silver is expected to rise to $35 an ounce by the end of the year, up about 20% from current levels.
According to Commerzbank, gold investors need to keep a close eye on the currency markets, particularly the euro/dollar trend. “The eurusd is close to 1.2 and if it breaks that then gold can break through $2,000 an ounce.”
On the daily chart, the DOLLAR.DXY held firm after two days of gains and is trading around 92.80. The daily chart MACD red momentum column again turns expansionary, with the KDJ random index trying to move up from the 50 level, indicating either a strengthening of short-term bullish momentum or further turbulence to the upside.
On the 4-hour chart, the DOLLAR index is continuing its rally from its lowest level in more than two years, with the focus on whether it can break through its 100-period average completely. The MACD red momentum column was little changed, with the KDJ random index hitting an overbought level above, indicating strong bullish momentum for the dollar and further gains in the short term.
On daily charts, gold tried to rally after yesterday’s heavy losses and is now trading around $1,960. The daily MACD green momentum column turned steady, while the KDJ random index continued to hover around the 50 level, indicating solid bearish momentum for gold and further volatility.
On the 4-hour chart, gold continues its downward trend from $1990 and is hovering around its 100-date average of $1950. The MACD green momentum column is relatively strong, with KDJ stochastic trying to rebound from oversold levels, indicating strong bearish momentum for gold, short term or further volatility.
On daily charts, silver is hovering near $27.70 after two straight days of losses. The daily MACD green momentum column turns expansionary with the KDJ stochastic hovering above the 50 level, indicating increased bearish momentum for silver and further price volatility.
In the 4-hour chart, silver rallied after hitting a low of $27.05, watching to see if that support can be sustained. MACD green momentum column weakened slightly, KDJ random index tried to rebound from the oversold level, indicating silver bearish momentum weakened, short term or further shocks to the upside.
Fundamentals positive factors:
1, the U.S. state department issued a statement on Wednesday, said it would activity restrictions for Chinese diplomats in the work, including the Chinese ambassador to the United States, a senior diplomat and meet with local officials to visit the United States university approved by the us, China’s ambassador to the United States embassy or consulate outside the embassy for more than 50 people cultural activities must be approved by the United States.
- India’s Ministry of Electronics and Information Technology (MEIT) issued a notice on September 2 banning 118 Chinese apps “suspected of engaging in activities that endanger India’s sovereignty and (territorial) integrity, defence, national security and public order”, according to ANI News network.
- Secretary of State Mike Pompeo says the Trump administration will announce major policies in the near future to counter China’s theft of sensitive U.S. technology and revitalize the U.S. economy in a broader context.
- The U.S. Trade Representative’s office announced on Tuesday that it would extend exemptions for some Chinese goods, including smartwatches and medical masks. But the extension is only until the end of 2020, compared with the previous one-year extension.
Fundamentals negative factors:
- The three major U.S. stock indexes surged Wednesday, with the Nasdaq breaking through the round-number 12000 and the Dow back above 29,000.
- The Institute for Supply Management said on Tuesday its index of U.S. manufacturing activity rose to 56 in August from 54.2 in July. It was the highest level since January 2019 and marked three straight months of growth.
- The Speaker of the US House of Representatives Nancy Pelosi said after a phone call with THE US Treasury Secretary Steven Mnuchin that Democrats and the White House had a serious disagreement about the seriousness of the coVID-19 relief statement.
- On Friday, Congressional Democrats and the White House remained divided over how much the next stimulus package should spend to help the coronavirus hit US economy.