Asian shares fell across the board on Wednesday, extending the previous day’s rout on Wall Street, while spot gold continued its slide, trading around $1,925 and silver was little changed at $26.55.
Gold prices bottomed out yesterday, rebounding from near two-week lows hit earlier in the session, after a selloff in equity markets prompted investors to seek the safe haven of the precious metal.
Global stock markets tumbled and oil prices plunged on Tuesday amid a sharp sell-off in technology stocks, uncertainty over Britain’s exit and concerns about rising new cases. It’s worth noting that Tesla shares recorded their biggest one-day percentage drop in history because they’re not included in the S&P 500.
Wall Street’s rally, which had been driven in large part by massive monetary and fiscal stimulus, came to an abrupt end last week, with the Nasdaq off 9.9% from its intraday record as investors took profits after the Nasdaq rose to about 70% above its pop-era low.
In addition to the stock market rout, a series of geopolitical uncertainties continue to support gold. The United States plans to ban cotton and tomato imports from China’s Xinjiang province, according to a Reuters update.
Earlier on Wednesday, a spokesman for the US Customs and Border Protection (CBP) confirmed that officials were preparing to order a halt to imports of cotton and tomato products from China’s western Xinjiang province because of allegations of forced Labour.
“The Trump administration was initially expected to announce these actions on Tuesday, but due to scheduling issues, this has been postponed until later in the week,” the spokesman said.
Brenda Smith, CBP Assistant Commissioner for Enforcement, said, “We have reasonable but inconclusive evidence that there is a risk of forced labor in the supply chain associated with cotton goods and tomatoes from Xinjiang. We will continue to investigate to fill in those gaps.”
In a draft statement seen by Reuters, CBP said it identified mandatory Labour targets involving cotton, textiles and tomato supply chains “including debt bondage, unfree movement, isolation, intimidation and threats, wage detention and ill-treatment of working and living conditions”.
In addition to the uncertainties in China and the United States, the latest vaccine developments also sparked risk aversion, positive for gold.
AstraZeneca has suspended phase III clinical trials of its COVID-19 vaccine, media reports say.
Astrazeneca said in a statement that the suspension was due to safety concerns, that the practice was normal in vaccine research and that it was due to unexplained circumstances during the testing process until the results of the investigation were known. The group stressed that the suspension of vaccine testing was to ensure the impartiality of the research.
Citing sources, STAT said researchers were told that the tests were suspended due to prudent safety concerns after a volunteer participant in the UK had an adverse reaction to the vaccine in the study.
Chief White House infectious disease expert Anthony Fauci said there was a “low probability” of a coVID-19 vaccine appearing before the November 3 presidential election and a “high probability” of a vaccine appearing before the end of the year.
As for the outlook for gold, currency strategist Ilya Spivak said, “$1,900 / oz support is very important for the gold market right now.”
Ole Hansen, head of commodity strategy at Saxo Bank, said gold had been oscillating around trend lines formed after the March lows and could test the $1,900 an ounce mark after losing 1930 support.
On the daily chart, the dollar index.DXY, which surged yesterday to a post-93.60 high, is trading in a tight range around 93.50. The daily chart MACD red kinetic energy column continued to expand, with KDJ stochastic trying to approach the overbought level upward, indicating a strengthening of short-term bullish momentum or further shock to the upside.
On the 4-hour chart, the DOLLAR index continued its previous rally and has stabilized at its 200-day moving average. The MACD red momentum column was largely stable, and the KDJ random index has hit the overbought level, indicating that bullish momentum for the dollar remains, short term caution overbought triggered a correction.
On the daily chart, gold remains in its recent volatile downtrend, trading around $1,925. The daily chart MACD green momentum column was basically stable with the KDJ random index falling below the 50 level, indicating that bearish momentum for gold has strengthened and the risk of further choppy declines.
The four-hour chart showed gold plunging as low as $1,996 yesterday before recovering to trade around its 20-session average of 1930. MACD red kinetic energy column is very weak, KDJ random index held steady above 50, indicating the lack of bullish momentum gold, short term or further volatility down.
On daily charts, silver continued its volatile downtrend in recent days and is trading below $26.60. The daily MACD green momentum column gradually expanded, with the KDJ random index falling below the 50 level, indicating solid bearish momentum for silver and further volatile price declines.
On the 4-hour chart, silver briefly fell below its 200-day moving average support yesterday, watching to see if it could hold this level. The MACD red column is very weak, with the KDJ stochastic hovering above the 50 level, indicating weak bullish momentum for silver, short term or further choppy downside.
Fundamentals positive factors:
- Chinese Foreign Ministry Spokesman Zhao Lijian said at a regular press conference on September 8 that the Indian side’s actions seriously violated the provisions of relevant agreements between China and India, and its military provocations were of a very bad nature. The Chinese troops under the theater of Operations will resolutely perform their duties and missions and safeguard China’s territorial sovereignty.
- The US will take steps on Tuesday to ban imports of cotton and tomato products from China’s western Xinjiang region because of allegations of “forced labor production”, customs and Border Protection officials said.
- Shares of AstraZeneca PLC plunged 6% in after-market trading after CNBC reported that the drug maker had called off phase III clinical trials of its COVID-19 vaccine.
- In the early morning of September 8, Beijing time, the official WeChat official account of the Chinese military, “China military website”, published a statement by the spokesman of the western theater command on India’s illegal line-crossing provocation again, accusing India of illegally crossing the line again and blatantly shooting threats.
- As the U.S. election nears, President Donald Trump on Monday again floated the idea of a decoupling of the U.S. and China economies, suggesting that the United States would not lose out if the two countries stopped doing business.
Fundamentals negative factors:
- In a post on social media on Monday, Ms von Der Leyen urged Mr Johnson to honour the commitments made in the Brexit deal signed late last year. Brexit turmoil hits euro, boosts DOLLAR
- On Friday, the Labor Department released its nonfarm payrolls report, which showed 1.71 million new jobs were created in August, compared with market expectations of 1.35 million. The jobless rate was 8.4 percent and the market was expecting 9.8 percent, a fourth straight month of improvement, boosting confidence in the U.S. economy
- U.S. Treasury Secretary Steven Mnuchin says the White House and Congress will reach an agreement to fund the federal government through early December, with details of the bill to be finalised next week. The measure would keep U.S. government agencies open to avoid a government shutdown after existing funding ends Sept. 30. Mnuchin and House Speaker Nancy Pelosi have agreed to expand funding, according to a Democratic aide.
- New U.S. claims for state unemployment benefits fell to 881,000 in the week ended August 29, from a previous reading of 1.006 million, the labor Department said on Thursday, the fifth straight weekly decline and the lowest since April 4.