Spot gold rebounded in Asian morning trading on Wednesday after a brief rally that took it to $1,660 an ounce, rising more than $10 on the day. Gold fell more than $30 yesterday as the dollar and us stocks rebounded. However, the dollar fell back sharply after trading began in Asia on Wednesday, while U.S. stock futures also fell sharply, adding to risk aversion and giving gold a stronger bounce.
The dollar and U.S. stocks rose sharply Tuesday as trump spoke on tax cuts and the epidemic
US President Donald Trump proposed a 0 percent payroll tax rate during a meeting with Republican lawmakers on Capitol Hill on Tuesday that would last through the rest of the year, White House officials said on Tuesday.
U.S. President Donald Trump earlier told republican senators he wants an election to cut payroll taxes. Mr. Trump said he had a good meeting with the senators and that the republican party was united. The meeting focused on the stimulus package, with payroll taxes also on the agenda. I want to protect aviation and transportation.
In response to the new coronavirus, Mr. Trump said the White House doctor believed he had no reason to test for a new coronavirus. He himself did not feel the need to be tested for the new coronavirus because he felt well. He also noted that the United States has done a good job of detecting new coronaviruses. The virus will go away. People are urged to “remain calm”.
At a meeting with Republican senators, US President Donald Trump laid out two options for his plan to reduce the burden on the economy, either cutting payroll taxes until the end of the year or making the tax cuts permanent, according to sources. Republican senator Marco Rubio said the payroll tax cut could be as much as $300 billion.
The dollar index.dxy continued to rally on the news, hitting a high of 96.61 on Tuesday, more than 160 points above its session low.
The dollar rose as traders bet on the U.S. government’s fiscal stimulus, but that could prove difficult to sustain once more details of the plan become available, Deutsche’s chief international strategist said.
U.S. stocks rose sharply Tuesday on expectations that President Donald Trump will unveil a series of stimulus measures.
The dow closed up 1,167.14 points, or 4.9%, at 25,018.16. The s&p 500 rose 4.9 percent to 2882.23, its biggest one-day gain since December 26, 2018. The NASDAQ gained 4.9 percent to 8,347.40.
‘fiscal stimulus is a recipe for bridging the gap between before and after the coronavirus,’ said Brent Schutte, chief investment strategist at northwest mutual wealth management. It certainly won’t cure the virus, but it will at least help contain some of its negative effects on the economy.”
On Monday, the market suffered a historic selloff, with the dow falling 7.8% and the s&p 500 7.6%, their biggest one-day declines since 2008.
Gold sub-market strong rebound close to 1660
Spot gold rebounded strongly in early Asian trading on Wednesday, briefly touching $1,660 an ounce. Gold prices fell more than 1 percent on Tuesday and analysts said they had been hit hard yesterday by a sharp rise in the dollar and a surge in us stocks that had stoked risk appetite.
Spot gold week ended at $1641.80 an ounce, down $30.95 or 1.84%, at $1648.94 an ounce.
On Monday, gold rose as much as 1.7% to $1,702.56 an ounce, its highest level since December 2012. The move followed a sharp drop in global stock markets over the potential economic impact of the outbreak and a drop in crude prices triggered by the oil price war.
Quantitative Commodity Research analyst Peter Fertig pointed out: “financial markets are stabilizing; We see stocks up, yields up a bit, the dollar up. So what has supported gold over the last few days has now become a negative.”
However, the dollar index fell below 96.20 on Wednesday, down nearly 40 points on the day. Gold rallied on the back of a weaker dollar.
In addition, U.S. stock futures fell sharply in Asian trading, prompting a rise in risk aversion that helped fuel gold’s rally. S&p 500 futures were down 2%, NASDAQ futures down nearly 2% and dow futures down 1.71%.
A meeting between president Trump and republican senators has failed to reach a resolution on an economic stimulus plan, according to the Washington Post.
“Tuesday’s rally is likely to be a ‘dead cat rally’ after the big declines, and the market will continue to fall,” Jim Wyckoff, senior analyst at Kitco Metals, said in a report.
Flavio Tosti, an analyst at FXStreet, wrote in a note that resistance was at $1,670, $1,680.00 and $1,694.00.
Expectations of further monetary easing from central Banks and continued concerns about the global outbreak of a new bout of pneumonia will help gold.
Investors are focused on the European central bank’s policy meeting on Thursday, which is expected to follow the fed’s interest rate cut. Markets also expect the fed to cut rates again at its March 18 meeting.
“We expect to hear more dovish comments from central Banks around the world and some easing,” said Michael Matousek, head of traders at U.S. Global Investors.
According to the latest data released by the world health organization on March 10, 32,778 new cases of pneumonia have been confirmed outside China.
According to the who’s daily outbreak report, the number of newly confirmed cases of pneumonia outside China increased by 4105 to 32,778 as of 10:00 pm CET (17:00 GMT). The number of deaths outside China rose by 186 from the previous day to 872. Globally, the number of new crown pneumonia cases increased by 4,125 to 113,702 from the previous day. The number of deaths increased by 203 from the previous day to 4,012.
In addition to the uncertainty caused by the virus, the global impact of the oil price war will also support gold prices in the short term, said FXTM market analyst Han Tan.
“I wouldn’t be surprised if gold goes to $1,700 again,” Tan said. “This will be triggered by signs that the outbreak is getting worse or the confirmation that we have from hard data that major economies are shrinking under the weight of the outbreak.”