Spot gold continued its decline in Asian trading on Wednesday, hitting a fresh intraday low below $1960, while silver extended its losses to below $28.
Better-than-expected U.S. manufacturing data yesterday boosted hopes for a U.S. economic recovery, sparking a sustained rally in the dollar from its lowest in more than two years, while gold retreated from an earlier near two-week high to close near $1970.
Economic data on Tuesday showed U.S. manufacturing activity accelerated to a nearly two-year high in August, with the Institute for Supply Management’s index of national manufacturing activity rising to its highest level since November 2018, driven by a surge in new orders.
Still, rising uncertainty in The U.S. and China continues to support gold.
Us Secretary of State Mike Pompeo responded on September 1 to a warning by Chinese Foreign Minister Wang Yi in late August about a “new cold war”, issuing two threats against China.
Wang Yi, China’s foreign minister, warned Mr Pompeo last month that a new cold war between the US and China must be avoided, implying that us-China relations could become more strained. In response, Pompeo said the cold war analogy between China and the United States makes sense, but the current situation is different from that of the Cold War. The United States is facing a country of 1.4 billion people with different challenges, including economic challenges.
In the future, Pompeo said, the world can see the United States addressing this new challenge in a very serious way, including the Trump administration’s efforts to limit the involvement of Chinese companies like Huawei in intellectual property theft, and you can see the United States confronting it on all fronts, “all in the interests of the American economy.”
Pompeo pointed to actions taken by the Donald Trump administration to limit the activities of Chinese companies such as Huawei, the Chinese telecommunications giant, and said he expected further action. “We will do more. “The United States is going to take this very seriously in the coming days and weeks in order to protect our economic interests.”
In addition, pompeo said in an interview on Monday that he hopes to close all Confucius Institutes on U.S. campuses by the end of this year, following last month’s labeling of Confucius Institutes as “entities that promote Beijing’s global propaganda and influence and require them to register as foreign missions.
“I think everyone sees the risks associated with them [Confucius Institutes],” Pompeo said. Pompeo accused Chinese government-funded Confucius Institutes of recruiting “spies and collaborators” at US universities.
“I think these institutions see this,” pompeo said. “I hope we can close them all by the end of the year.”
As for the outlook for gold, commodity analysts at TD Securities say that while the market faces short-term risks, it will only be a matter of time before hedge funds return to being long. “With fed policy focused on employment and inflation, demand for gold will grow and long positions will increase in the coming weeks.”
Ole Hansen, head of commodity strategy at Saxo Bank, noted that the dollar’s earlier rally after hitting a two-year low had hurt gold bulls. Hansen believes that short-term volatility in the gold market will rise as the market consolidates but remains bullish in the long term.
On the daily chart, the DOLLAR index.DXY held steady after yesterday’s dip and is now trading around 92.35. The daily chart MACD red kinetic energy column was basically stable after weakening, while the KDJ random index held steady above the oversold level, indicating that short-term bullish momentum weakened or further volatility.
On the four-hour chart, the dollar index has continued to rally after hitting its lowest level in more than two years and is now back above its 20-period average. The MACD red momentum column gradually expanded, and the KDJ random index moved sharply upward toward the overbought level, indicating strong bearish momentum for the dollar and short-term or further gains.
On the daily chart, gold was under further pressure after yesterday’s rally and is now trading around 1960. The daily chart MACD green momentum column gradually weakened, and the KDJ random index broke above the 50 level, indicating that gold bearish momentum has slowed and is expected to rebound further.
The four-hour chart shows gold falling sharply yesterday after hitting a high above $1990 and closing in on its 100-date average of $1,954. The MACD green momentum column showed initial signs, with the KDJ random index falling below the 50 level, indicating that bearish momentum for gold has strengthened and may move lower in the short term.
On daily charts, silver was volatile yesterday but closed flat, trading in a narrow range around the 28 mark. The MACD green momentum column weakened slightly on the daily chart, with the KDJ stochastic trying to approach the overbought level, indicating less bearish momentum for silver and further price volatility.
On the 4-hour chart, silver continued to retreat from a peak of $28.90 yesterday, at one point losing its 20-session average. The MACD green momentum column appeared initially, with the KDJ random index falling below the 50 level, indicating that silver bearish momentum is strengthening, short term or further volatility downward.
Fundamentals positive factors:
- The U.S. Trade Representative’s office announced Tuesday that it will extend exemptions on 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.
2, in view of the troops in the region south of lake class and multiple locations across the sino-indian border line of actual control, the JiRong counsellor, a spokesman for the Chinese embassy in India on September 1, to respond, said the Chinese side has to share a solemn representation, the Indian strict control and constraint forces a line, to keep the promise, immediately stop all provocations, immediately withdraw illegally cross the line, to immediately stop any ACTS of escalation and complicate.
- Secretary of State Mike Pompeo announced Tuesday that the United States intends to stop the arms trade between China and Iran.
- Tensions between China and India. The Times of India reported On Monday that in a strategic move, the Indian army has occupied high ground on the left bank of The Pangongtso Lake in Ladakh, putting it on top of the area. Earlier, an Indian military spokesman said India had foiled Chinese troops’ entry into Indian territory near the southern bank of Lake Banguong Cho.
Fundamentals negative factors:
1.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 US Treasury Secretary Steven Mnuchin that Democrats and the White House had a serious disagreement over the seriousness of the coVID-19 relief statement.
- On Friday, Congressional Democrats and the White House remained divided over how much the next round of stimulus should spend to help the coronavirus hit us economy.
- House Speaker Nancy Pelosi issued a statement saying Democrats and Republicans remain far apart on the next economic stimulus package.