Spot gold briefly rose above $1,720 in Asian trading on Friday as it tried to build on overnight gains, with the market focused on trump’s press conference today.
Gold edged higher the previous day, trading above the 1700 level and as high as around $1,727, but gains on Wall Street caused it to pare back gains, though rising tensions between China and the United States supported gold to close just below $1,720.
Worldometers world real-time statistics show that as of 10:52 Beijing time on May 29, the global total number of confirmed covid-19 cases exceeded 5.9 million, reaching 5,905,415, and the total number of deaths exceeded 362,024, exceeding 360,000.
Among them, the United States has more than 1.76 million confirmed cases of covid-19, reaching 1,768,461 cases, and more than 100,000 deaths, reaching 103,330 cases. Both confirmed cases and deaths are the largest in the world.
The recent easing of blockades, optimism about the eventual availability of a covid-19 vaccine and massive us stimulus measures have been driving the market higher.
But in recent weeks, relations between the world’s two largest economies have soured, threatening a strong recovery from the sharp sell-off.
U.S. stocks rose for much of the day before reversing gains in late trading, dragged down by trump’s social media executive order and us-china relations.
The White House said after the close of business that Mr Trump had signed an executive order relating to social media companies that removed the exemptions they currently enjoy. In addition, concerns about U.S. -china relations may have contributed to the market’s late-day decline.
On May 28, the National People’s Congress of China passed the “Hong Kong version of the national security law”, which once again attracted the attention of the us. White House economic adviser Larry Kudlow said on the same day that the United States may need to treat Hong Kong like China when dealing with trade and other financial matters. The comments echoed remarks by secretary of state mike pompeo on Wednesday.
Secretary of state mike pompeo told congress on Wednesday that Hong Kong should no longer enjoy the special status it is granted under U.S. law. That could deal a significant blow to Hong Kong’s status as the world’s leading financial centre.
Separately, US President Donald trump said on Thursday that he would hold a press conference on China on Friday. His government is now considering moves to pressure China to implement a Hong Kong version of the national security law.
“We are concerned about tensions between the us and China, which have triggered a big sell-off,” said Tim Ghriskey, chief investment strategist at Inverness Counsel.
“The us and China are at odds on a lot of fronts, on trade, on the covid-19 investigation, and now there’s a fresh row over Hong Kong,” said Michael McCarthy, chief strategist at CMC Markets.
John Sharma, economist at national Australia bank, said: “the us is likely to respond to China’s version of the security law… The weak economy and persistently low interest rates are also supporting gold prices.”
TD Securities said that despite the recent pullback in gold prices, risk aversion due to trade issues would push gold to be a big winner. Bart Melek, the bank’s head of commodity strategy, said trade issues would drive new gold buying.
Mike McGlone, senior commodities strategist at BI, said gold’s rally is just beginning and investors should not worry too much about short-term price swings. The current pullback in gold prices is more like a “small branch of a larger trend”. McGlone said it would only be a matter of time before the next gold market rally looked above 1900.
On the daily chart, the dollar index continues to hover low after three days of losses and is now trading around 98.35, testing the key 200-day moving average, which could face a sharp sell-off if it falls below that level. On a technical level, the MACD green kinetic energy column gradually expanded and the KDJ stochastic index hit oversold levels downward, suggesting dollar shorts continued to gain momentum.
On the 4-hour chart, the usd index has formed a series of downward highs and lows, and its downward trend has been confirmed. The focus is on whether it can hold the key 98 level. The MACD green momentum column held steady, while the KDJ stochastic gauge hit oversold levels down, indicating strong dollar short momentum that the short term may attempt to stabilize.
On the daily chart, the gold price is still in shock consolidation pattern, the current twine around the 20 daily moving average, focus on the ability to stand 1700 dollars. The MACD green kinetic energy column stabilized and the KDJ stochastic index traded below 50, suggesting gold bears continued to gain momentum and could still fall.
On the four-hour chart, gold continues to rally from its previous low of $1,693 and is now testing its key 100-issue moving average to see if it can close above that level. The MACD red kinetic energy column held steady, with the KDJ random index trading slightly below oversold levels, indicating gold bulls were gaining momentum and then expected to stabilize.
Fundamental positive factors:
- Worldometers world real-time statistics show that, as of 10:52 on May 29, Beijing time, the global total number of confirmed covid-19 cases exceeded 5.9 million, reaching 5,905,415, and the total number of deaths exceeded 362,024, exceeding 360,000.
- US President Donald trump said on Thursday that he would hold a press conference on China on Friday.
- US President Donald trump signed an executive order against social media companies on Thursday, days after twitter said two of his tweets were “potentially misleading”. The bill seeks to weaken the influence of large social media platforms by reinterpreting a key 1996 law.
- The revised annualized quarterly rate of real GDP in the first quarter of the United States was -5.0%, and both the expected and the previous values were -4.8%.
Fundamental negative factors:
- On Thursday, the s&p 500 remained well above the lows it hit in March as business activity resumed after a weeks-long shutdown and hopes for a strong recovery were raised by massive stimulus measures to support the economy.
- The Japanese government announced on Wednesday that it will pass a second supplementary budget for 2020, which will see the Abe administration spend more than 234 trillion yen on fighting the epidemic and promoting economic recovery.
- The European commission on Wednesday unveiled a 750 billion euro ($826.5 billion) recovery fund as the region faces its worst economic crisis since the 1930s.
- Novavax, the us biotechnology company, said on Monday that it had begun the first human study of its experimental coronavirus vaccine.