In The Asian session on Monday, the DOLLAR index was basically stable, spot gold rose modestly, is now stable above the $1,900 / oz barrier. Investors will be keeping an eye on the latest developments in the US fiscal stimulus talks during the day. House Speaker Nancy Pelosi has set a deadline for a stimulus deal before the election, as President Donald Trump on Monday added that he wants a bigger stimulus package than pelosi’s. On Monday, Fed Chairman Colin Powell and Vice Chairman Larry Clarida are expected to make appearances, and their comments are expected to move markets. Investors are also focused on geopolitical developments such as the Taiwan Strait and China and India, and gold could be supported by buying if there are signs of escalating tensions.
Pelosi set a deadline for a stimulus deal before the election
House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin had a long discussion Saturday night about finalizing a stimulus package. Ms. Pelosi said a stimulus bill was still possible before the election, but that Monday was the deadline for progress with the White House. Ms Pelosi had been vetoing the Trump administration’s $1.8tn stimulus package for weeks.
Pelosi’s spokesman, Drew Hammill, later clarified that pelosi meant the current deadline for “certain things that are pending in the package” would be Tuesday, not Monday. Treasury Department spokeswoman Monica Crowley said on Twitter that Pelosi and Mnuchin spoke for an hour and 15 minutes and agreed to speak again on Monday.
U.S. President Donald Trump said in early Trading Monday in Atlanta that he wants a stimulus package bigger than Pelosi’s and that he believes Republican lawmakers will support his plan if Pelosi agrees to his economic stimulus plan.
Many of the priorities of the Democrats’ $2.2 trillion stimulus package have been rejected by Republicans.
Us media have suggested that Ms Pelosi’s move to set the deadline was designed to put pressure on the Trump administration. Given the legislative process in the House and Senate, it would be difficult to reach a bill before the election if the two sides could not agree by October 20.
Gold took a hit last week as negotiations between the White House, Senate Republicans and House Democrats over the US rescue plan stalled. Spot gold closed last week at $1,898.33 an ounce, down 1.6 percent for the week, ending a two-week run of gains.
Even if the White House and Democrats agree on a new rescue package, it would be almost impossible to push it through before the November 3 presidential election because of time constraints, according to White House economic adviser Scott Kudlow.
Rodrigo Catril, strategist at National Australia Bank in Sydney, said: “There is still no progress in the STIMULUS talks in the US, which darkens the prospects for a new round of support measures before the election. So it is hard to see an agreement before November 3, and markets are still thinking that another round of stimulus is coming, but at this stage it seems more likely to happen after the election.”
Kevin Grady, President of Phoenix Futures and Options, said gold price movements are directly related to the stimulus measures because gold is driven by inflation. ‘The more the government prints money, the more the dollar depreciates,’ he added.
Analysts said gold prices could risk further declines if a stimulus package is not agreed before the US election. And if the US stimulus bill is negotiated before the election, gold is set to rebound strongly.
In a gold survey released Friday by Kitco News, most Wall Street analysts and retail investors expect gold prices to move higher this week. Of the 16 analysts polled, 10 (63%) expect gold prices to rise; Two analysts (13 per cent) expect gold to fall this week; Four analysts (25%) said they expected prices to move sideways.
Charlie Nedoss, senior market strategist at LaSalle Futures Group in New York, said he remains bullish on gold as it has successfully rebounded from support at its 100-day moving average. “Gold has not closed below its 100-day moving average,” Nedoss said. “As long as you can hold it, you need to be long.”
Eureka Mining report editor Richard Baker said he expected gold to rise to $1,920 this week as the investment world remains risky.
In the officials’ remarks, Federal Reserve Chairman Colin Powell spoke Monday at the Annual meeting of the International Monetary Fund on cross-border payments and the future of digital currencies. Separately, Federal Reserve Vice Chairman John Clarida will speak on the economic outlook.
The geopolitical risks cannot be ignored
As well as the US fiscal stimulus talks, investors will also be watching developments on the geopolitical front. The situation across the Taiwan Strait and between China and the United States remains tense, while the military confrontation between China and India continues. If geopolitical tensions rise, the safe-haven metal is likely to be supported, analysts said.
Regarding the situation in the Taiwan Strait, Taiwan media Freedom Times reported on Monday that the Chinese People’s Liberation Army’s DF-17 medium-range ballistic missile has been deployed along China’s southeast coast in an attempt to deter Taiwan. As a matter of fact, the Taiwan military has responded to the PLA missile threat through years of “Han-Guang exercises” and “maneuvers” of missiles and radars. At the same time, it has strengthened its combat capability through the development of “Xiongere-E” missiles and the procurement of various precision munitions.
Earlier, Hong Kong’s South China Morning Post reported on Sunday that military observers and sources said Beijing was increasing militarization along its southeastern coast in preparation for a possible attack on Taiwan. Taiwan’s defense ministry said on Sunday that the PLA’s deployment and military developments, as well as its joint situation monitoring and investigation, are fully understood and appropriately handled.
As for the India-China situation, government sources said India and China are likely to hold an eighth round of military-to-military talks this week, with the focus on advancing discussions on the disengagement process in the eastern Ladakh region as winter approaches, India.com reported On Monday. “An eighth round of military talks could take place this week,” a source said. No date has been set.”
During the seventh round of talks on October 12, the two sides failed to make a breakthrough on the friction point of troop withdrawal. However, both sides have insisted that the talks were “positive and constructive”.
A day after the seventh round of talks, the two militaries issued a joint press statement saying they agreed to maintain dialogue and communication through military and diplomatic channels to reach a mutually acceptable solution to disengagement “at the earliest possible date.”
A piece of news about the situation in China and the United States also caught attention over the weekend. The Wall Street Journal reported on Saturday that the Chinese government has warned Washington that it may detain US citizens in China in response to justice Department charges against Chinese academics with links to the People’s Liberation Army.
Citing unnamed people familiar with the saying that the United States since the summer, an arrest is doing research in the United States more than university scientists in China, accusing them of hidden from the American authorities in the current status of the PLA, Chinese officials through various channels, such as the United States embassy in Beijing, many times to the United States warned that directly request the cancellation charges.