International spot gold was trading at $1,725 an ounce in the Asian session on Friday. Gold surged to a choppy high of $1,744.59 an ounce in the previous session before a choppy retreat that continues today.
Spot gold rose as high as $1,744.40 an ounce in early morning trading at $1,738.33 and dipped as low as $1,720.98 an ounce, down $11.25 or 0.65 percent, to close at $1,726.99.
Meanwhile, COMEX gold futures for August delivery ended up 19.1 dollar, or 1.10 percent, at $1,739.80 an ounce.
Gold has risen about 20% since hitting a three-month low of $1,450.98 an ounce on March 16. The Fed says it needs to keep its key interest rate near zero until at least 2022, and low interest rates tend to support gold, seen as a hedge against inflation and currency depreciation.
“There are a lot of new infections out there and Investors seem to be getting a little spooked, so almost everyone is hedging their bets, they’re basically selling everything except the dollar and natural gas,” said Michael Matousek, chief trader at U.S. Global Investors.
The dollar strengthened against major currencies in the previous session, benefiting from safe-haven funds, as stocks fell sharply on reports of increased cases of the virus when most U.S. states reopened.
On Thursday, the Dow Jones Closed down 1,861.82 points, or 6.9%, at 25128.17. The S&P 500 fell 5.9 per cent to 3,002.10; The Nasdaq Composite index fell 5.3% to 9,492.73.
Investors reignited fears of a renewed coVID-19 pandemic and priced in a gloomy economic forecast from the Federal Reserve on Thursday. All three major U.S. stock indexes fell well over 5 percent, their biggest one-day drop since March 16.
For now, the panic appears to be abating. So far, futures on the three major U.S. stock indexes have continued to rebound and are now up more than 1 percent. The move came after the US spot market suffered its worst sell-off in 12 weeks. The S&P 500 fell 5.9 percent, its biggest drop since March 16, on signs that a second wave of the disease could hit the United States.
According to data from Worldometers, as of 0938 June 12, the cumulative number of confirmed cases of COVID-19 worldwide has exceeded 7.59 million, with 7,595,646 confirmed cases and 423,811 deaths so far exceeding 420,000. The United States has the world’s highest number of confirmed cases of COVID-19, with nearly 2.09 million cases to 2,089,661, and more than 116,000 deaths to 116,029.
According to media reports, 21 states now have a rise in new confirmed cases, with a surge in at least nine. Arizona’s death toll rose by 30 percent. Texas has seen a 70% increase in confirmed cases.
The number of DEATHS from COVID-19 in the United States could double to 200,000 by September, predicts John Jha, director of Harvard University’s Global Health Institute.
As for the gold’s next move, FX Empire commentator Christopher Lewis predicts the metal will soon break through the rectangular range that began on April 14 and open the door to the $1800 mark. Once that happens, the market will likely continue to contemplate the $2,000 mark.
However, Capital Economics said gold could fall to $1,600 an ounce by the end of the year, which would mean a fall of $125 from its current level of about $1,725. James O’Rourke, commodities economist at Capital Economics, said the main reason for such pessimism was that in the short to medium term, fears of runaway inflation were premature.
On the daily chart, the DOLLAR index extended its decline to a low before rebounding, the MACD green momentum column narrowed, and the KDJ random index turned higher, indicating that the dollar rally momentum restarted and the coming rally continued.
In the 4-hour chart, the DOLLAR index started to rebound from the low, the MACD red kinetic column expanded, and the KDJ random index rose further, indicating that the dollar’s short-term rebound momentum strengthened, and the incoming continuation of short-term rebound momentum.
On daily charts, gold retreated from its highs but remained firmly above its major moving averages. MACD green momentum column narrowed, KDJ random index slightly under pressure, indicating the strength of gold retracement momentum, the next to continue to fall.
In the 4-hour chart, gold continues to move back in shock, the MACD red momentum column shrinks significantly, and the KDJ stochastic index further declines, indicating that gold short-term downward momentum intensifies, and the incoming materials further extend the decline.
Fundamentals positive factors:
- According to statistics from Worldometers, as of 0938 June 12, the cumulative number of confirmed cases of COVID-19 worldwide has exceeded 7.59 million, so far 7,595,646 cases have been confirmed and 423,811 deaths have exceeded 420,000.
- The National Health Commission said there were seven new confirmed cases yesterday, including six imported cases (five in Shanghai and one in Fujian) and one local case in Beijing. No new deaths; There were no new suspected cases.
- While the world is slowly restarting its economy, fears of a second wave are growing as the number of confirmed cases in US states skyrockets. It took nearly three months to reach a million confirmed cases in the United States, but only six weeks to double the number of confirmed cases. According to data obtained by Yahoo News from the CENTERS for Disease Control and Prevention (CDC), one-day cases in the United States rose 36.5 percent in recent days as street protests and state restarts continued.
- The Federal Reserve reaffirmed its commitment to continuing to provide unconventional spending to the economy in the early hours of Thursday, as policymakers forecast THAT GDP would shrink 6.5 percent this year and unemployment would hit 9.3 percent by the end of the year. “The current public health crisis will weigh on economic activity, employment and inflation in the short term and pose considerable risks to the medium-term economic outlook,” the Fed said in its latest policy statement. Policymakers issued their first economic forecasts since December, saying they would keep overnight interest rates near zero until the end of 2022.
Fundamentals negative factors:
- Moderna confirmed that it expects to begin phase III studies of coVID-19 vaccine candidates in July, according to a statement on Thursday. The final phase of the placebo-controlled study will include 30,000 subjects in the United States. Participants in the non-placebo group will receive 100 micrograms of the candidate vaccine, which has been identified as “the best dose to maximize the immune response and minimize adverse reactions,” the statement said. Phase III trials will be conducted with the National Institutes of Health.
- Regeneron Inc. said it is testing a novel coronavirus drug in humans in multiple locations. This is the first time that the novel Coronavirus antibody “cocktail” drug has been tested in humans in the United States, and the company expects it to be available in the fall if the trial is successful.
- New claims for jobless benefits fell for the 10th straight week last week, according to Labor Department data released on Thursday, as the U.S. labor market continued its slow recovery from the coronavirus pandemic. Initial claims were 1.54 million, below the 1.6 million forecast by Economists polled by Dow Jones and down 355,000 from just under 1.9 million the previous week. The four-week moving average fell by 286,250 to 2 million. Continuing claims for state unemployment benefits fell by 339,000 to 20.9 million.
- The U.S. Consumer Price Index fell 0.1% in May, according to Labor Department data released On Wednesday. The core CPI fell 0.1 percent on a monthly basis. The CPI grew at an annual rate of 0.1% in May; Core CPI grew at an annual rate of 1.2%.