Gold surged more than 2.5 percent to a one-month high of $1689.50 an ounce on the back of a massive new round of fed stimulus after the central bank announced a massive new round of stimulus to ease the economic toll of a new outbreak.
The federal reserve on Thursday unveiled a sweeping $2.3 trillion rescue plan to support local governments and small and medium-sized businesses, in its latest effort to protect the U.S. economy from a new pandemic.
The federal reserve announced $2.3 trillion in measures to support local governments and small and medium-sized businesses, the latest effort to keep the U.S. economy intact as it battles the coronavirus epidemic. The move came after the latest data from the labor department showed the number of americans filing new claims for jobless benefits jumped 6.6 million last week, bringing the number of new claims over the past three weeks to more than 16 million. The combination of these factors has revived risk aversion, giving gold a big boost.
Meanwhile, federal reserve chairman colin Powell said on Thursday that all available tools will continue to be used until the U.S. economy begins to fully recover from the damage caused by the novel coronavirus outbreak.
The three major U.S. stock indexes rallied on the fed’s stimulus, with the dow up more than 500 points and up more than 13 percent so far this week, on track for its biggest weekly gain since 1938. On the outbreak front, US President Donald trump is reported to be planning to set up a second coronavirus task force to focus on the economic damage caused by the outbreak.
Gold holdings in exchange traded funds rose to a record high of 3,185 tonnes in March, worth $165bn, the world gold council said on Wednesday.
Tai Wong, head of base and precious metal derivatives trading at mandi bank, said the fed had launched another howitzer from its Arsenal to provide a massive bailout for small and medium-sized businesses and municipalities.
“The fed will be buying riskier bonds, which should keep this v-shaped rally going for a while,” said Edward Moya, senior market analyst at OANDA in New York. “The fed has made it clear to the markets that they are doing everything they can to support the economy.”
Jeffrey Halley, senior market analyst at OANDA, said buying risk aversion ahead of the weekend supported higher gold prices.
Nitesh Shah, head of commodities research at WisdomTree, said gold could rise 20 percent from its current level after various loose monetary policies and fiscal stimulus. Shah points out that a gold price of $2,000 an ounce is realistic.
On the daily chart, the dollar index extended a pullback, the MACD green momentum column expanded, the KDJ random index turned lower, indicating dollar pullback momentum strengthened, and then may extend the downward momentum.
On the 4-hour chart, the dollar index fell under pressure, MACD green kinetic energy column unchanged, KDJ random index moderate flat, indicating the dollar short – term kinetic energy is insufficient, then or continue to maintain pressure trading pattern.
On the daily chart, gold prices further shock rally, MACD red momentum column amplification, KDJ random index slightly higher, indicating gold momentum to strengthen, next expected to further rally.
On the 4-hour chart, the gold price rose after trading in a narrow range, MACD red kinetic energy column slightly expanded, KDJ random index slightly lower, indicating that gold may maintain an upward trend in the short run, but the kinetic energy is slightly insufficient.
fundamentals Positive factors:
- Worldometers real-time data shows that the number of confirmed cases in the United States has exceeded 460,000, reaching 462,180; The number of deaths rose to 16,444. Globally, the number of confirmed cases rose to 1,591,523, with 95,021 deaths.
- The federal reserve announced measures to provide up to $2.3 trillion in loans, including new loans to small businesses and direct loans to state and local governments.
- The labor department reported 6.66 million new claims for state unemployment benefits in the week ended April 4, compared with expectations of 5 million, up from 6.648 million.
- On Thursday, OPEC + offered to cut output by 15m-20m b/d, but Russia insisted it would only cut output if the us joined the deal.
Fundamental negative factors:
1.The number of daily increases in coronavirus infections in the United States has declined since Friday, according to data from Johns Hopkins university. Since then, the daily increase in cases worldwide has also declined. An influential model tracking the us coronavirus pandemic now predicts fewer deaths and fewer hospital beds than estimated last week.
- Anthony fauci, President of the national institute of allergy and infectious diseases, told fox news on Wednesday that the number of coronavirus-related deaths in the United States is now lower than initially estimated, and noted that the situation should improve after this week. However, he added that efforts to deal with the virus should be strengthened.
- US President Donald trump said on Tuesday that it is time to seriously consider restarting economic activity. We will restart the economy much sooner rather than later. It is happy to restart the economy now, but some places have been hit hard by the outbreak.
- The number of confirmed covid-19 cases rose to 135,586 from 132,547 in Italy on Tuesday, with an increase of 604 to 17,127 deaths. The increase in covid-19 cases was the lowest since March 13.