Gold investments: the debate over negative interest rates! More pressure from trump! Powell makes his big debut today! Gold prices break close!

Spot gold remained in a tight range after a small rise on Wednesday, trading around the 1700 mark, with a focus on comments from federal reserve chairman colin Powell.

In a recent shift in tone from hopes of lifting the blockade to fears of a second wave of disease once the economy restarts, risk sentiment was cautious on Tuesday as gold continued to rebound to close above $1,700.

Statistics from real-time data update website worldometers show that as of 10:44 Beijing time on May 13, there have been more than 4.34 million confirmed cases of covid-19 worldwide, with a total of 4,342,345 confirmed cases and 292,893 deaths of more than 290,000.

Among them, there were more than 1.4 million confirmed cases of covid-19 in the United States, or 1,408,636 cases, and more than 80,000 deaths, or 83,425 cases.

For now, investors are weighing the possibility of a second wave of infections against hopes that a loosening of home restrictions could boost the U.S. economic recovery.

On Tuesday, the nation’s top infectious disease expert warned that restarting the U.S. economy too early could lead to a resurgence of covid-19 and hamper economic recovery.

Anthony Fauci, director of the national institute of allergy and infectious diseases, told congress that the novel coronavirus, which has killed 80,000 americans, was not under control and that treatments and vaccines might not be ready until late August or early September.

With the outbreak pushing the U.S. economy toward its worst recession since the great depression, fed funds futures suggest the federal funds rate will be about 1 basis point below 0% by June 2021.

US President Donald trump said on social media on Tuesday that “as long as other countries are enjoying the benefits of negative interest rates, the us should also accept such a ‘gift’.”

Mr Trump has long called for the fed to lower interest rates, even into negative territory. In march, the fed cut interest rates to near zero. This is a historic move to mitigate the economic impact of the coronavirus pandemic. At the time, Mr Trump said the move made him “very happy”.

But fed officials have been playing down expectations of negative rates. Some fed members have said they see no need to move interest rates, currently close to zero, into negative territory.

The current target range for the federal funds rate is between zero and 0.25 percent, and the lower end is already at zero. Negative interest rates are often seen as an emergency measure to further stimulate economic growth.

Fed chairman colin Powell said in March that negative rates were unlikely to help the economy. Investors expect him to reinforce that message in a webcast commentary on Wednesday.

Powell will speak on the economy at 9 a.m. local time on May 13 (9 p.m. Beijing time on May 13).

Joe Manimbo, senior market analyst at western union business solutions in New York, said dollar moves this week will be influenced by fed chairman colin Powell’s speech on Wednesday, as well as data on U.S. jobless claims and retail sales.

Technical analysis:

The dollar

Daily chart, the dollar index recently maintained a volatile pattern, trading near the 100 level, the overall above the main average level. Technically, the MACD red kinetic energy column initially appeared, RSI index hovering around 50, KDJ random index approaching oversold level, suggesting or continue consolidation.

On the 4-hour chart, the usd index seems to form upward highs and lows, focusing on whether the recent support 99.65 will be broken, more short-term support to look at the 100 moving average level. MACD green kinetic energy column slightly expanded, KDJ random index fell below the 50 level, short – term still face downward pressure.

gold

On the daily chart, the gold price trading range is narrowing, now around the 1700 level fluctuation, the overall winding around the 20 moving average. The MACD green kinetic energy column stabilizes and the KDJ stochastic index hovered near the 50 level, suggesting or continuing to oscillate.

As can be seen from the 4-hour chart, the gold price has also formed a series of highs and lows, with the current moving average starting to trade intensively, focusing on whether a decisive direction can emerge. The MACD green kinetic energy column is close to disappearing, and the KDJ random index is hovering near the 50 level, still waiting for the breakthrough direction.

Fundamental positive factors:

  1. According to statistics from real-time data update website worldometers, as of 10:44 Beijing time on May 13, the global total number of confirmed covid-19 cases exceeded 4.34 million, with a total of 4,342,345 confirmed cases and 292,893 deaths exceeding 290,000.
  2. The novel coronavirus that has killed 80,000 americans has not been brought under control and treatments and vaccines may not be ready until late August or early September, Anthony Fauci, director of the national institute of allergy and infectious diseases, told congress on Tuesday.
  3. The CBOE market volatility index.vix, Wall Street’s fear gauge, rose 5.47 points to 33.04 on Tuesday, its biggest one-day point gain in more than three weeks.
  4. The interest-rate options market suggests a 23% chance that the fed funds rate will turn negative by the end of December, according to bank of America. The likelihood of digestion last week was 9% to 10%.

Fundamental negative factors:

  1. Atlanta federal reserve bank President Raphael Bostic said recently that negative interest rates are not a good option in a time of crisis.
  2. James Bullard, President of the St Louis federal reserve bank, reiterated his skepticism about negative interest rates, noting that the strategy had historically had mixed results and was “not a very good solution for the us”. Dallas federal reserve bank President Robert Kaplan recently told CNN he opposes negative interest rates.
  3. Amid rising tensions between China and the United States, China’s tariff commission of the state council on Tuesday announced a new list of goods to be exempted from additional U.S. tariffs, including 79 items including rare earth metals and gold ore.
  4. Senior trade representatives from the United States and China played down serious differences over economic losses caused by the novel coronavirus pandemic and said they would press ahead with the implementation of the “first phase” trade agreement after the call.

Leave a Reply

Your email address will not be published. Required fields are marked *