In the Asian session on Friday, the DOLLAR index edged lower, now at around 92.75. Spot gold rose quickly in the short term, with prices just breaking through the $1,940 / oz barrier and recovering about $15 from intraday lows. On Friday evening Beijing time, investors will welcome the non-farm payrolls report, which is expected to cause market volatility. In addition to economic data, geopolitics, including the U.S. and China and India, remain the focus of investors’ attention. New Delhi: The Indian military has decided to change its defensive posture, new Delhi said on Friday, with several Indian media outlets reporting that the military may be preparing for a potential military confrontation.
Gold prices fell to near one-week lows on Thursday as a rebound in the dollar weighed on prices. Independent analyst Ross Norman said gold is looking more closely at its relationship with the dollar, and the dollar’s rise has clearly made gold less attractive.
The dollar index.DXY ended Thursday at 92.78, up 0.14 percent after hitting an intraday high of 93.08. Spot gold closed at $1,930.21 an ounce, down $12.26, or 0.63 percent.
The dollar fell slightly in Asian trading on Friday, providing a rebound in gold prices as spot gold surged above $1,940 an ounce. Geopolitical tensions and the Fed’s dovish stance have also supported gold prices.
On Thursday, Federal Reserve Chairman Colin Powell announced a major policy shift at the central bank’s annual meeting in Jackson Hole. Mr Powell says the Fed will adopt an average inflation target, which means that interest rates are likely to remain low even if inflation rises slightly in the future.
Fed governor Brainard said on Tuesday the central bank would need more stimulus to support an economy still reeling from the effects of the virus pandemic.
“The Fed’s decision to provide more stimulus reinforces the fact that the economy is still in crisis,” said David Meger, head of metals trading at High Ridge Futures in New York. “The small decline in safe-haven assets like gold that we’ve seen is just consolidation.”
“The Fed has said it can keep inflation above its 2 percent target for some time and it looks as if they will keep monetary policy extremely loose, which should help gold,” said David Madden, market analyst at CMC Markets UK.
George Gero, managing director of Wealth Management at Royal Bank of Canada, said in a note that gold prices should continue to be supported as investors’ persistent concerns about the spread of the virus and the low interest rate environment tend to push them into sharp falls.
“In the short term, gold is likely to remain within a wide range, with support around $1,910 and resistance around $1985,” said Lukman Otunuga, an analyst at FXTM.
Investors are awaiting U.S. non-farm payrolls data later on Friday. The pace of renewed hiring is expected to slow in August, with fewer jobs likely to be created than in July as workers continue to be laid off.
Non-farm payrolls are expected to have risen 1.35 million jobs in August and the unemployment rate fell to 9.8 percent, according to authoritative overseas media surveys. The data is due at 20:30 Beijing time on Friday.
By comparison, the U.S. added 1.76 million jobs in July and the unemployment rate stood at 10.2 percent.
The “small farm” ADP data earlier this week did not bode well for the non-farm payrolls report. U.S. adPS added 428,000 jobs in August, well below expectations for a 950,000 gain, after a revision to a 212,000 gain.
Vice President of employment data firm ADP said job postings in August pointed to a slowing economic recovery. Job growth has been minimal, and employment growth in all sizes and industries has not come close to pre-epidemic levels.
Analysts said the dollar could take a hit if the U.S. non-farm report performs badly, pushing gold higher.
Naeem Aslam, chief market analyst at AvaTrade, said the “biggest risk event for gold” was Friday’s U.S. non-farm payrolls data and that “only strong data can break” the gold rally.
Ole Hansen, head of commodity strategy at Saxo Bank, said near-term volatility in the gold market will rise as the market consolidates but remains bullish in the long term.
Adrian Day, CHIEF executive of Adrian Day Asset Management, says investors should not worry about some short-term profit-taking and consolidation as he remains bullish on gold, which will break through $2,000 by the end of the year, as the dollar enters a new long-term downward path thanks to the Fed’s ultra-loose monetary policy.
Commerzbank analyst Eugen Weinberg said that in addition to other strong fundamentals, such as a weak economy and falling interest rates, the Australian and U.S. mints reported very high demand for gold COINS, which will push gold prices above $2,000 in the long term.
Tensions remain high on the southern shore of the Bangong Lake region in eastern Ladakh, following new tensions between India and China on the LINE of Actual Control (LAC), India Today reported. Indian and Chinese tanks have been deployed at close quarters, within range of each other. But in the meantime, the two sides are still talking.
Sources said PLA tanks and armoured vehicles were deployed in hilly areas near Kala Top, which is currently occupied by the Indian army. China has deployed heavy and light tanks in the area, not far from Indian positions. However, the Indian army at Kala Top is well equipped with tanks and artillery support.
The Indian Army has deployed a tank regiment on the plain between Spanggur Tso and Chushul. It is southwest of the site of the August 29 clashes.
In a press release issued on August 31, Army spokesman Aman Anand said Chinese PEOPLE’s Liberation Army (PLA) forces conducted provocative military actions to change the status quo in violation of previous consensus reached between the two countries in military and diplomatic mediation on the evening of August 29 and 30. The Indian army took pre-emptive measures to strengthen India’s position on the south bank of Bangong Lake and frustrate China’s intention to unilaterally change the facts on the ground. The statement noted that the Indian military is committed to maintaining peace and tranquillity through dialogue, but is equally determined to protect its territorial integrity.
Responding to the Indian allegations, Chinese Foreign Ministry spokesman Zhao Lijian said at a regular press conference on August 31 that Chinese border troops have always strictly observed the Line of Actual Control and have never crossed the line. The border troops of the two countries have been in communication on local issues.
Senior Colonel Zhang Shuihui, spokesman for the Western Theater Command of the Chinese People’s Liberation Army (PLA), said that on August 31, the Indian army broke the consensus reached at previous multi-level talks between the two sides and illegally crossed the line again in the area south of Bangong Lake in the western section of the China-India border and near The Reqin Pass, making a public provocation and causing renewed tensions along the border.
For India, the official said in a statement on the china-india boundary “pre-emptive” measures, China’s foreign ministry spokesman HuaChunYing said at a regular press conference on September 2, India, the statement “without being pressed” fully proves that this incident was illegal troops cross the line provocation to unilaterally change the border region, in violation of the agreement and the settlement agreement between the first important consensus. Hua chunying pointed out that at present, China and India are maintaining communication through military and diplomatic channels. China urges the Indian side to strictly restrain its front-line forces, immediately stop all provocative actions, immediately withdraw all personnel illegally crossing the line and immediately stop any actions that may cause tension and complicate the situation.