Gold prices rise and fall at both ends of the hard to solve the tug of war, is currently a key resistance shock. The swearing-in of U.S. President Joe Biden, the dovish stance of Janet Yellen, his nominee for Treasury secretary, and a new wave of U.S. fiscal stimulus and the abandonment of a weak dollar have shifted market risk, helping the dollar but dampening gold gains. But the tone of the U.S. -China disputes in the early days of Biden’s administration gave gold sellers hope that China would sanction 28 U.S. individuals, most of whom were members of former President Donald Trump’s team, bolstering gold’s gains. In the face of a seesaw, Biden’s inaugural speech and executive orders will be key indicators that drive risk.
Fundamental analysis: Biden sworn in, Trump leaves White House
Joe Biden was sworn in as the 46th president of the United States. After taking the oath of office, he also gave an inaugural speech, making clear to the American people that he will continue to lead the country back to the right track. Trump and Melania left the White House in a helicopter for Andrews Air Force Base. Mr. Trump left for Florida after a brief farewell ceremony. Trump left a traditional note for Biden before leaving the White House, according to people familiar with the matter, but the contents of the note were not immediately known.
Since taking office, Biden has signed 15 executive orders to address the Novel Coronavirus pandemic, climate change and racial inequality, and to undo some policies implemented by President Trump. These include restarting the process of returning the United States to the Paris climate agreement and revoking the permit for the controversial Keystone XL oil pipeline from Canada. Before taking office, Biden made clear his early focus would be on tackling the epidemic and reviving the domestic economy. Biden also ordered masks to be worn in all federal buildings and on all federal lands, as well as social distance, and ended the national emergency declaration that was the basis for embezzling federal funds to build a wall along the U.S. -Mexico border.
The economy is expected to improve, with Democratic Party members reaffirming their party’s agenda for action as part of their election pledge. Biden has promised to contain the spread of the new pandemic, the World Health Organization (WHO) has indicated that it will be quicker to approve a large vaccine programme, and scientists at Oxford University are preparing a new version of the vaccine to combat the emerging new pandemic strain.
With Wall Street hitting a new record high, the Standard & Poor’s 500 index opened higher and continued to move higher. Wall Street is generally optimistic about the $190 million fiscal stimulus Biden enacted, largely because it could boost the economy and speed up the distribution of vaccines. Yellen also urged lawmakers to act aggressively to rescue the domestic economy and worry about the U.S. debt problem later.
“Gold is pulling in two directions as its safe-haven function clashes with its inflation hedge nature,” said analysts at TD Securities. Over the past few months, gold’s trading system has made inflation expectations, rather than nominal interest rates, the main driver of real interest rates. In the past few weeks, however, Treasury supply concerns and a change in tone from the Federal Reserve have led to a sharp rise in the yield curve, exacerbating interest rate volatility, which in turn has turned gold into a safe haven as real interest rates are increasingly driven by expectations of nominal rather than inflation. For now, the rise in interest rates remains contained, sending real interest rates tumbling again and leading to a tug of war between gold and competing investment properties.”
Fundamentals: China unveils US sanctions list of individuals Trump team members
On the negative side of the risk, China released a list of 28 US individuals to be sanctioned, most of them members of Mr Trump’s team. China’s foreign ministry announced on the official website, in the past few years, some American anti-china politicians for their own political gain and bias hatred toward China, ignoring the interests of the people in China and the United States, planning, promote the implementation of a series of crazy behavior, serious interference in China’s internal affairs, harm the interests of China and hurt the feelings of the Chinese people, also seriously damage the china-us relations. The Chinese government is unswerving in its determination to safeguard national sovereignty, security and development interests. China has decided to impose sanctions on 28 people who are mainly responsible for the serious violation of China’s sovereignty on China-related issues.
Chinese Foreign Ministry spokeswoman Hua Chunying has previously said that the Trump administration is pushing for accelerators to undermine Sino-US relations. “Some US politicians are so irresponsible that they will say anything they need to say to make China a target,” she said. Her comments followed a blistering speech by then-U.S. Attorney General Barr, who accused the Chinese government of human rights abuses, espionage and economic blitzkrieging. “The People’s Republic of China is now engaged in an economic blitzkrieg — an aggressive, orchestrated, whole-government campaign to seize the commanding heights of the global economy and overtake the US as the world’s preeminent superpower,” he said.
Against this backdrop, Wall Street benchmarks with the exception of the S&P 500 closed in the green, while the yield on the 10-year US Treasury note fell. Looking ahead, Australian December jobs data and the Bank of Japan’s monetary policy meeting, which will attract investors in the Asian session, could provide additional fuel for optimism. But investors will focus on the ECB monetary policy meeting and Biden’s first day of action.
Gold broke through its 200-day moving average, now trading at around $1,847, extending its upward momentum. The 50-day moving average is near $1,960 and the Jan. 12 high was near $1,865. If gold falls below its 200-day moving average in a seesaw, it will have to face the uptrend line it has seen since March last year, currently at around $1,829.