Gold investment: trump’s words trigger market ‘blood case’! Fed to cut rates by 100 basis points! Why can’t gold go up?

US President Donald trump’s speech on the new pneumonia outbreak disappointed markets during European trading on Thursday, leaving global stock markets bloodied, oil down more than 7% at one point and gold falling to $1,630.

US President Donald Trump spoke at the White House about the new pneumonia outbreak at 9 am Beijing time on Thursday. In his speech, Mr. Trump said the us had taken a number of strong measures to combat the outbreak. In one measure, the United States will suspend all travel from Europe for 30 days starting Friday, but the travel ban does not include Britain. In addition, Mr. Trump said he would provide an additional $200 billion in liquidity to stabilize markets and take urgent action to provide aid.

Before his official remarks, investors had expected Mr. Trump to announce a big stimulus package, but he stopped short of any major moves.

Financial website Forexlive said U.S. stock index futures extended losses after trump’s coronavirus speech, as markets expressed disappointment at the stimulus measures announced by the U.S. government.

After trump’s speech, Asian stocks plunged, with U.S. futures falling, NASDAQ futures triggering circuit breakers, European futures selling off, European Stoxx 50 index futures down 8%, and Britain’s FTSE 100 index futures down 5.8%.

Meanwhile, crude oil prices plunged sharply in the short term, with losses in the U.S. and Brazil extending to 7 percent at one point, while spot gold continued to fall, hitting a low of $1,630 as investors sold gold to make margin calls on the stock market.

Michael McCarthy, the chief market strategist at CMC, said US President Donald Trump has announced new measures to tackle the new coronavirus pandemic and reduce the damage to the economy. But judging by the market reaction, the speech was “too little” and the timing “too late”. Mr. Trump “can’t do all the magic” on the basis of his proposed moratorium on payroll taxes to boost the economy. Risk aversion has been strong, with safe-haven assets such as the yen and the Swiss franc performing strongly.

Notably, fed funds futures rose in the Asian session, suggesting a further 100 basis point cut in March. The probability that the fed will cut rates by 100 basis points to 0-0.25 percent in March rose to 94.4 percent from 50.2 percent this morning, according to CME fed watch.

Technical analysis:

The dollar

On the daily chart, the U.S. index continued to fall in the day after a narrow close, hitting a low of 96.06, still below all major averages. On the technical side, MACD green kinetic energy column is weakening, RSI index trading below 50, KDJ random index from oversold levels continue to rebound, short term or continue to consolidate.

On the 4-hour chart, the dollar index has continued to rebound from its low of 94.63, but the rally has started to retreat after hitting its 50-session moving average and is now close to the 96 marks. The MACD red kinetic energy column weakened, the RSI index fell below the 50 levels, and the KDJ random index fell from the overbought level, suggesting there is room for further declines.

gold

On the daily chart, gold tried to rebound after three straight days of losses, but the trend has clearly pushed back and is now barely above its 20-day moving average of 1630. From the technical perspective, the MACD green kinetic energy column appears initially, RSI index hovering around 50, KDJ random index downward approaching 50 levels, alert to the possibility of further correction.

On the 4-hour chart, the risk of gold peaking has become increasingly apparent, falling from a high of $1,703 to around $1,630 and losing its key 100-point moving average. From the technical perspective, the MACD green kinetic energy column continues to hold steady, and the KDJ random index approaches the oversold level downward, focusing on the possibility of a short-term correction.

fundamentals Positive factor:

  1. In a speech on Thursday, President Trump announced that the United States will ban all visitors from Europe for the next 30 days. He said the UK would not be bound by it.
  2. The head of the world health organization (who), tan Desai, said Monday that the new pneumonia outbreak has acquired the characteristics of a pandemic.

3. The bank of England slashed interest rates by half a percentage point to 0.25 percent without warning on Wednesday in a lightening attempt to shore up the British economy against the impact of a new coronavirus outbreak.

Fundamental negative factors:

  1. According to the statistics of the national health and fitness commission, from 0:00 to 24:00 on March 11, 8 new cases were confirmed in Hubei province, among which 8 cases were confirmed in Wuhan. In addition to Wuhan, the newly confirmed cases in Hubei province were 0 for 7 consecutive days.
  2. In a post on the social networking site on Wednesday, Trump said he was fully prepared to use all the resources necessary from the federal government to deal with the new coronavirus outbreak. Mr. Trump’s comments have been accused of trying to calm market fears of a rapidly spreading outbreak.
  3. Treasury Secretary Steven mnuchin told lawmakers on Wednesday that the White House is studying measures such as tax breaks, loan guarantees, compensation for workers’ lost wages, assistance to small and medium-sized businesses and support for airlines, hotels and other travel companies.

4. The labor department said on Wednesday that consumer prices unexpectedly rose 0.1 percent in February as higher food and housing costs offset a drop in gasoline prices.

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