On Thursday (May 7), spot gold was back above the 1690 mark as it tried to rebound from a sharp drop the previous day, with a focus on U.S. weekly jobless claims.
Gold took a big hit last day, falling from above 1700 to around 1680, down more than $20, or more than 1 percent, before closing around $1,684.
Many countries, including Italy, Germany and the United States, are tentatively easing their blockade. New York (ap) — stocks opened higher on Wednesday on hopes of improved corporate activity, while investors ignored a surprise drop in private payrolls of more than 20 million last month.
A record 20.236 million private sector jobs were lost in April as an outbreak of novel coronavirus forced business shutdowns, clogging the U.S. economy and triggering a historic loss in the overall labor market last month.
Improving risk appetite among investors as countries begin to ease restrictions on the outbreak, combined with a stronger dollar and expectations that gold supplies will increase as smelters resume operations, weighed on the gold market.
“Gold can’t get away from the reopening,” said Edward Moya, senior market analyst at Oanda. Some U.S. states are relaxing measures taken to prevent a coronavirus pandemic. Despite expectations that COVID 19 deaths could rise to 3,000 a day next month, investors remain optimistic as new cases have not surged.”
“However, the virus takes longer to penetrate into rural areas,” he said. Against this backdrop, “gold prices are likely to continue to consolidate until cases surge elsewhere in the us or the sporadic economic rebound disappoints.”
Moya said gold should see strong support from the $1,650 level in the short term and should still target $1,800 in the coming months.
The move comes after a six-week shutdown of smelters hit global gold supplies and helped push the New York/London gold price spread to its widest level in decades. Gold is up about 11 percent so far this year as the global economy slumps during a pandemic.
Bart Melek, head of commodities strategy at TD Securities, said: “this could be the result of a combination of two factors, namely more supply to COMEX and possibly a little less interest in gold as risk appetite strengthens and the dollar rebounds.”
“The lack of jewellery demand, combined with very positive sentiment from equity markets as the economy reopens, is weighing on gold prices,” said commerzbank analyst Eugen Weinberg.
Todd Horwitz, chief market strategist at BubbaTrading.com, wrote that there was another big seller in the gold market on Wednesday, with gold falling another $10 or so out of nearly 4,000 contracts. This is the same pattern we have seen in seven of the last nine days, when a large seller sold gold in a illiquid market. The good news for gold is that it has managed to hold on to major support, but the bad news is that the pattern is not good and could collapse, Horwitz said.
As of 10:34 Beijing time on May 7, more than 3.82 million COVID 19 cases have been confirmed globally, with a total of 3,822,860 confirmed cases and 265,076 deaths of more than 265,000, according to real-time data update website worldometers.
Among them, the total number of confirmed covid-19 cases in the United States exceeded 1.26 million, with 1,263,092 cases, and the total number of deaths exceeded 74,799, with 74,000 cases.
House Democrats are pushing a massive fifth round of novel coronavirus rescue legislation that could be their most far-reaching effort yet to deal with the economic impact of a pandemic, with a multi-trillion-dollar stimulus package in the works. The cost could match or exceed the $2.2 trillion CARES act passed in March.
On the daily chart, the dollar index in 4 consecutive days after the rise of the high consolidation, has broken through the 100 mark, trading around 100.10, on all major averages. From the technical point of view, MACD green kinetic energy column weakened nearly disappeared, RSI index hovering around 50, KDJ random index to rise above the 50 level, there is still rebound space.
On the 4-hour chart, the dollar index is still in the midst of a strong rally since 98.77, with the key 100 level already above all major averages. MACD red kinetic energy column began to weaken, KDJ random index hit the overbought level, short – term may be a small correction.
On the daily chart, gold has rebounded slightly from a more than $20 plunge the previous day and is now back above 1690, below its 20-day moving average. The MACD green kinetic energy column was basically stable, and the KDJ random index fell below the 50 level, still facing further downward pressure.
On the 4-hour chart, gold is still in a volatile pattern, is below the main moving average level, focus on whether to return to 1700. MACD green kinetic energy column weakened, KDJ random index downward close to oversold level, short – term or continue to shock.
fundamentals Positive factors :
- According to statistics from real-time information and data update website world meters, as of 10:34 Beijing time on May 7, more than 3.82 million COVID 19 cases have been confirmed globally, of which 3,822,860 have been confirmed and 265,076 have died and more than 265,000 have been confirmed.
- Us data released on Wednesday showed employment at ADP, known as “small non-farm”, fell by 20.236 million, the worst performance on record, and the total number of jobs lost in just one month was more than double the total lost during the great depression. The ADP report set the tone for Friday’s non-farm payrolls report, which is expected to show a 21.5 million decline in April.
- Federal Reserve official James Bullard said Friday’s April jobs report is likely to be one of the worst in U.S. history.
- We are in the midst of a recession, but the economy may begin to recover in the second half of the year, said federal reserve vice-chairman Peter Clarida. We are experiencing the most severe contraction in economic activity and a surge in unemployment, which will soar to its highest level since 1940.
Fundamental negative factors:
- US President Donald Trump tweeted that the White House task force on the new outbreak response would work indefinitely, but that the new focus would be on security and restarting the economy.
- House Democrats are pushing a massive fifth round of novel coronavirus rescue legislation, in what could be their most far-reaching effort yet to deal with the economic impact of a pandemic, with a multi-trillion-dollar stimulus package in the works. The cost could match or exceed the $2.2 trillion CARES act passed in March.
- U.S. Vice President Mike Pence said the White House is in discussions to disband the task force on the new outbreak and possibly transfer the response to FEMA.
- According to the New York Times, US President Donald Trump is considering tax cuts for businesses in his next economic stimulus bill. Mr. Trump said payroll and capital gains taxes should be considered, and liability guarantees and business tax breaks for restaurants and entertainment venues must be considered.