On Wednesday (May 20) Asian market, spot gold short – term rapid pull up, and close to $1,750 an ounce. Fed chairman colin Powell’s comments on Tuesday gave gold momentum. On the other hand, the dollar took a beating on Tuesday as Powell hinted at more monetary easing from the federal reserve, putting the dollar under intraday pressure near 99.50 in the week’s sanya session. Investors are bracing for the minutes of the federal reserve’s April meeting in the early hours of Thursday Beijing time, which are expected to cause market volatility. In terms of the global epidemic, the total number of confirmed covid-19 cases worldwide has exceeded 4.98 million, and the total number of confirmed cases in the United States has exceeded 1.57 million.
Mr Powell’s comments sparked a rally in gold prices
Gold prices rose Tuesday on expectations the federal reserve will provide more monetary stimulus. Spot gold week rose as high as $1,747.40 an ounce in intraday trading, and fell as low as $1,725.39 to $1,744.00 an ounce, up $12.38, or 0.71 percent.
Spot gold jumped about $5 a Troy ounce to as high as $1,749.83 in Asian trading on Wednesday.
In congressional testimony Tuesday, fed chairman colin Powell reiterated the central bank’s commitment to using tools to support the U.S. economy during the coronavirus pandemic. Driven by Powell’s comments, spot gold hit an intraday high of $1,747.40 an ounce on Tuesday.
“At this challenging time, we are committed to using all of our tools to support the economy, even as we recognize that these actions are part of a broader public sector response,” fed chairman colin Powell said in testimony before the senate banking committee.
Powell also reiterated that the fed and congress may need to do more before the novel coronavirus crisis is over. “The fed may need to do more, and so may congress,” he said in response to one of the questions.
To limit the spread of novel coronavirus, massive economic stimulus measures were taken around the world to limit the economic losses caused by lockdowns and suspensions. These measures supported gold, which is widely seen as a hedge against inflation and currency depreciation.
“Powell indicated that all emergency lending programs will end by the end of the month and the fed and congress may need to pump more money into the economy,” said Edward Moya, senior market analyst at Oanda. “The fed is far from finished pumping stimulus money into the economy, and gold prices like that.”
Adrian Day, chairman and chief executive of Adrian Day asset management, said: “there is no doubt that gold’s momentum is gaining as more and more investors see gold as the only option under the unlimited quantitative easing policy.”
Leading financial website Economies.com wrote on Wednesday that gold prices are rising and moving away from bullish channel support. From the 4-hour chart, EMA 50 and stochastic support bullish gold price expectations.
Waiting for gold to rise further in the next few sessions, the next major gold target is $1805.00 an ounce, said Economies.com. Gold above $1,722.00 an ounce is a key condition for gold to remain bullish.
Gold prices fell on Monday as renewed optimism over novel coronavirus vaccines sapped safe-haven demand, causing the precious metal to retreat from its highest intraday level since 2012.
Despite reports of early advances in vaccines by drug company Moderna, some gold bulls say massive fiscal and monetary stimulus by governments around the world will support gold buying in the long run.
“The vaccine may not be a complete game changer for long-term gold positions as central bank balance sheets will not magically evaporate and political/trade tensions between China and the United States are unlikely to ease,” Stephen Innes, global chief market strategist at AxiCorp, wrote in a daily research note.
“The fundamentals of gold have never been better,” says Jeffrey Sica, founder of Circle Squared Alternative Investments. Unless we’re more optimistic about vaccines, we’re going to start to see a spike to new highs. People are still worried about outbreaks around the world. Any news that companies are struggling to reintegrate into the economy will ultimately push gold higher.”
Renewed uncertainty over us-china relations was also supportive, analysts said. U.S. President Donald trump said last Thursday that the novel coronavirus pandemic had cast a shadow over his January trade deal with China and suggested he might even sever ties with the country.
Takeo Kamai, executive director at CLSA, said: “the trade war between China and the us was the biggest theme in the market last year. “If the conflict escalates beyond trade, it will be a big problem.”
Everett Millman, a specialist in precious metals at Gainesville, said rising tensions between China and the United States were “the biggest bad news” and gold prices tend to rise as a result. Looking ahead, Millman said the u.s.-china issue will once again become a big issue. “I don’t see any improvement in tensions,” he said. If anything, the longer we have been dealing with coronavirus, the stronger that argument will be between China and the United States.”
Fed minutes strike watch out for another blow to the dollar
At 02:00 Beijing time on Thursday, the federal open market committee releases the minutes of its April monetary policy meeting.
Analysts said investors need to pay close attention to fed officials’ views on the economic outlook and current low interest rate policy in the minutes.
In its April decision, the fed left its target range for the federal funds rate unchanged at 0-0.25% and its interest rate on excess reserves unchanged at 0.1%.
The fed highlighted the impact of novel coronavirus and pledged to continue using all its tools to support the U.S. economy.
In its post-meeting statement, the fed said its members unanimously agreed with the decision. The public health crisis is weighing on economic activity.
The fed also said novel coronavirus posed a significant risk in the medium term and would continue to buy Treasury bonds and mortgage-backed securities in the amounts needed. The fed will keep interest rates low until it is confident the economy can get back on track.
“We are doing everything we can” to help American families and businesses navigate the public health crisis, Mr. Powell said at a news conference at the time. He added that the outbreak could threaten economic growth next year. “We will continue to use our tools to ensure that the recovery comes as strong as possible,” Powell said.
If the minutes are dovish, the dollar could be further pressured, analysts said.
The dollar index.dxy fell on Tuesday, hitting an intraday low of 99.24 to close at 99.55 as Powell hinted at more monetary stimulus from the fed.
Globally, novel coronavirus infections exceeded 4.98 million in the United States, with a total of 1.57 million confirmed cases
According to the latest statistics, the cumulative number of confirmed covid-19 cases worldwide has exceeded 4.98 million. There are now more than 200,000 confirmed cases in six countries, including Russia, the UK, Spain, Italy and Brazil. In addition, France, Germany, Turkey, Iran and India have all reported more than 100,000 confirmed cases. The total number of confirmed cases in the United States has exceeded 1.57 million.
Worldometers world real-time statistics show that as of 9:09 on May 20, Beijing time, the global total number of confirmed covid-19 cases exceeded 4.98 million, reaching 4985,662, and the total number of deaths exceeded 324,000, reaching 324,889. The United States has the world’s largest number of cumulative confirmed covid-19 cases, with more than 1.57 million cases and 1570,583 cases, and more than 93,000 deaths, with 93,533 cases.
U.S. President Donald trump announced a $19 billion coronavirus food aid program on May 19, local time, to support farmers and ranchers in the United States and “maintain the health of the food supply” during the coronavirus crisis.
Trump said on May 18 that he has been taking hydroxychloroquine regularly for a week and a half to prevent novel coronavirus infection. Mr. Trump said he was not sure whether the drug would work, but that even if it did not, it would not make people “sick or die.” Medical experts have previously warned against using hydroxychloroquine because its efficacy against coronavirus has not been proven and can cause serious side effects to health.
On May 15, local time, US President Donald trump announced a plan called “operation warp speed” to speed up the research on covid-19 vaccine, drug and testing, and said he expected to develop a new covid-19 vaccine before the end of this year.
On May 17, the former director of the U.S. centers for disease control and prevention, James Frieden, warned in an interview that the outbreak in the United States is still not at its worst.