Gold investments: the macro backdrop has never been stronger! Gold spirals upward! Beware of a sudden rise in trade!

Spot gold continued to wobble around $1,730 in Asian trading on Friday, holding on to the previous day’s big gains as markets focused on the “scare data” – us retail sales data.

Gold continued to rally above the key 1,730 level, with support firming below $1,700 as disappointing employment data and central bank signals that further government stimulus may be needed added to investor concerns about the global economic recovery.

Statistics from real-time data update website worldometers show that as of 10:24 Beijing time on May 15, there were more than 4.52 million confirmed cases of covid-19 worldwide, with a total of 4,525,420 confirmed cases and 303,371 deaths of more than 300,000.

Among them, the total number of confirmed covid-19 cases in the United States exceeded 1.45 million, or 1,457,593, and the total number of deaths exceeded 86,000, or 86,912.

Initial claims for state unemployment benefits totaled 2.981 million in the week ended May 9, the labor department said, the latest in a series of reports on massive job losses. Although that was down from 3.176 million in the previous week and the sixth straight week of declines, initial claims for unemployment benefits remained surprisingly high.

But the market reaction was muted, with investors seemingly braced for bad economic data.

Ian Langen, head of U.S. interest rate strategy at BMO Capital Markets in New York, said the mild market reaction suggests traders are more concerned about whether government officials and business leaders can restart parts of the U.S. economy without triggering a second wave of disease.

“The market has priced in a second surge in cases, but not a second prolonged shutdown,” says Mr Langen.

In addition to bad unemployment Numbers and fears of a second outbreak, speculation is growing that trade tensions could suddenly rise as investors worry about trade.

Mr Trump’s comments late on Wednesday blamed China for the novel coronavirus outbreak and reignited fears of a trade war, even as the current enforced lockdown continues to damage the economy.

“They shouldn’t let that happen. So I made a big trade deal, but now I think I feel differently about it. The outbreak came before the ink was dry. For me, the feeling has changed, “trump said.

Scott Kennedy, director of the China business and political economy research program at the center for strategic and international studies, called trump’s latest comments “a dangerous bluff.” “Avoiding communication is not an effective strategy for solving a crisis that requires global cooperation,” Kennedy said. Cutting economic ties would seriously damage the U.S. economy.”

Edward Moya, senior market analyst at broker OANDA, said: “some investors seem to be starting to be bearish on us equities, us-china relations continue to deteriorate and the data from the us is very bleak, all of which support safe-haven demand. Gold prices have spiralled in the past few weeks but now the macroeconomic backdrop also looks set to support higher prices in the short term.”

“It is safe to say that gold fundamentals have never been stronger, as the novel coronavirus pandemic (and its depressing economic reality) led to unprecedented quantitative easing ona global scale,” wrote equity analyst Matthew Miller.

Technical analysis:

The dollar

On the daily chart, the dollar index is trying to build on its gains of the previous two days and is now trading around 100.35, above its main moving average. On the technical side, the MACD red kinetic energy column expands slightly, the RSI index hovered above 50, and the KDJ random index approached the overbought level upward, paying attention to the possibility of further rise.

On the 4-hour chart, the usd index appears to be forming upward highs and lows, with the recent high of 100.40 having been broken, which seems to confirm the upward trend. MACD red kinetic energy column slightly contracted, KDJ random indicators from the overbought level down, short – term alert to the possibility of a correction.

gold

On the daily chart, after three days of gains, gold is now trading above $1,730, moving closer to the year’s high of $1,747. The MACD green kinetic energy column is close to disappearing, and the KDJ stochastic index is approaching the overbought level, which may oscillate before the key resistance.

On the four-hour chart, gold has also formed rising highs and lows, breaking above its previous high of $1,723, confirming the upward trend and focusing on whether it can stabilize. MACD red kinetic energy column gradually expanded, KDJ random index hit the overbought level, beware of short – term correction.

Fundamental positive factors:

  1. According to statistics from real-time data update website worldometers, as of 10:24 Beijing time on May 15, there were more than 4.52 million confirmed cases of covid-19 worldwide, with a total of 4,525,420 confirmed cases and a total of 303,371 deaths of more than 300,000.
  2. New claims for state unemployment benefits hit 2.981 million last week, labor department data showed on Thursday, bringing the total number of new claims since the coronavirus crisis to nearly 36.5 million, the largest job loss in U.S. history.
  3. U.S. President Donald trump said Thursday he was “very disappointed” that China had failed to contain novel coronavirus.
  4. Federal reserve chairman colin Powell said on Wednesday policymakers may have to use more weapons to pull the United States out of the economic mire, but flatly rejected negative interest rates, saying the fed was not considering such a move.

Fundamental negative factors:

  1. Trump predicts that there will be more than 100,000 covid-19 deaths in the United States. Mr. Trump also took a sudden stance in favor of the dollar, saying it was a good time for it to strengthen and it was a great thing to have a strong dollar.
  2. US President Donald trump said on Wednesday he still strongly believes the federal reserve should implement negative interest rates, but gave a nod to fed chairman colin Powell.
  3. Atlanta federal reserve bank President Raphael Bostic said recently that negative interest rates are not a good option in a time of crisis.
  4. St. Louis federal reserve bank President James bullard reiterated skepticism about negative rates, noting that the strategy has a history of mixed results and “is not a very good solution for the United States.” Dallas fed President Charles kaplan recently told CNN he opposes negative interest rates.

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