The DOLLAR index.DXY came under moderate pressure in Asian trading on Friday, trading near 93.25. Spot gold rose slightly to trade at around $1,947 an ounce. On the border situation between China and India, the Foreign ministers of China and India held more than two hours of direct talks in Moscow and reached a five-point consensus. Analysts said that despite the agreement, tensions could continue for some time if Chinese and Indian troops fail to achieve a rapid disengagement. The Us and Taiwan are in talks over a state Department visit to Taiwan, a move that could further anger Beijing and worsen relations between the two countries, according to new reports. Geopolitical tensions, a weak dollar and a loose central bank stance are still likely to spur further sharp gains.
Gold long brewing bigger explosion
Spot gold traded in a tight range around $1,947 an ounce in The Asian session on Friday. Gold rose above $1,960 an ounce earlier on Thursday, but turned lower in U.S. trading. The dollar initially came under pressure from the euro’s strength after the ECB’s decision to leave policy on hold, but the greenback managed to reverse its decline and gold finally closed near $1,945 an ounce on Thursday.
The ECB kept its policy unchanged at minus 0.5 per cent and kept its refinancing rate at 0 per cent on Thursday, while reiterating its plan to keep rates at or below current levels until inflation rises to its 2 per cent target.
So far this year, gold has risen about 28% as central Banks around the world have built ona raft of unconventional stimulus measures to offset the economic damage caused by the novel Coronavirus pandemic. Gold is considered a hedge against inflation and currency depreciation.
“All central Banks are in the same boat,” said Edward Meir, capital markets analyst at ED&F Man. They’re going to have to keep printing money and keep easing policy to counter the recession we’re in, “which would provide support for gold.
George Gero, managing director of Wealth Management at Royal Bank of Canada, said he remains bullish on gold in the near term as increased market uncertainty could drive prices higher.
Julius Baer analyst Carsten Menke said gold was supported by prolonged market uncertainty.
Bart Melek, head of commodity strategy at TD Securities in New York, said that while the dollar has room to rise, strong fundamentals will continue to support gold. He added that he expected gold to continue to hold support at $1,920 an ounce.
The recovery has not been as fast as expected, Melek said, adding: “There are fears that the virus could break out again, and oil and other commodity markets suggest that growth may be slowing, and that all monetary policy will be relaxed.”
Naeem Aslam, chief market analyst at AvaTrade, said: “The mixed economic data confirms that the U.S. economy is gradually recovering. However, things are not improving, which is why we are seeing an improvement in gold prices. “Gold has probably reached a bottom and could go higher.”
“Gold has held well above its 50-day moving average and will remain supported unless it falls below its August low of $1,863.67,” said Michael Hewson, chief market analyst at CMC Markets UK.
The vaccine news was also supportive for gold. Earlier this week, a global trial of AstraZeneca’s experimental Novel Coronavirus vaccine was halted after a study participant developed an unexplained illness.
News of the delayed vaccine trial could be indirectly supportive for gold prices as it could lead to a prolonged economic slowdown and further expectations of fiscal stimulus, said Saxo Bank analyst Ole Hansen.
On the outlook for gold, ANZ wrote that prices would surge to $2,300 an ounce as physical demand recovered.
Anz notes that equity market turmoil has supported gold’s role as a risk diversification tool, but a stronger dollar could discourage gold investment. It said central Banks remained dovish and expected interest rates to be close to zero. Ongoing quantitative easing should support investor demand. At the same time, the focus will gradually shift to reviving physical gold demand.
“Gold remains an attractive investment as the recent price correction is likely to be short-lived,” ANZ said. Ample money supply, low interest rates and macroeconomic uncertainty should support gold investment. Physical demand is recovering, so we expect gold to reach $2,300 an ounce next year.”
It remains to be seen what happens next when China and India reach the five-point consensus
With the crisis in Ladakh deepening, Indian Foreign Minister Sushma Jaisen and His Chinese counterpart Wang Yi held more than two hours of direct talks in Moscow on Thursday evening in an attempt to ease tensions along the Line of Actual Control. The meeting took place on the sidelines of the SCO Foreign Ministers’ meeting, which lasted until midnight.
On September 10, local time, Chinese State Councilor and Foreign Minister Wang Yi met with Indian Foreign Minister Sushma Jaishankar on the sidelines of the Shanghai Cooperation Organization Foreign Ministers’ Meeting in Moscow, CCTV reported.
Wang said that as two major neighbors, it is normal for China and India to have some differences. But to put differences in the proper position of bilateral relations, the key is to adhere to the strategic consensus reached by the leaders of the two countries that China and India are not rivals but cooperative partners, not threats to each other and development opportunities for each other. As two major developing countries undergoing rapid revitalization, what we need now is cooperation rather than confrontation, mutual trust rather than suspicion. The more difficult it is, the more important it is to consolidate the overall situation and safeguard mutual trust. China-india relations have come to a crossroads again. But as long as the two sides keep to the right direction of china-India relations, there will be no difficulties that we cannot overcome and no difficulties that we cannot overcome.
Wang Yi elaborated on China’s solemn position on the situation at the China-India border, stressing that the pressing task is to immediately stop the firing, provocation and other dangerous ACTS in violation of its commitment, withdraw all personnel and equipment that cross the line, disengage as soon as possible and push for the relaxation and cooling of the situation. China supports the border troops of the two sides to strengthen on-spot dialogue and solve specific issues. China is also ready to maintain communication with the Indian side through diplomatic and military channels and work together to restore peace and tranquility in the border areas.
Su said India does not want to see the escalation of tension in the india-China border area. India’s policy towards China has not changed, nor, I believe, has China’s. The Indian side always believes that the development of India-China bilateral relations should not be based on the settlement of the boundary question, nor does it wish to go back to the past. In fact, India-China relations have made continuous positive progress in recent years. Leaders of the two countries have met many times and reached a series of important consensus on developing bilateral relations. The Indian side is ready to work with China to ease the border tension through dialogue and negotiation and restore and maintain peace and tranquility in the border areas.
After comprehensive and in-depth discussions, the two sides reached five-point consensus on the current situation.
- The two ministers agreed that the two sides should follow the important consensus reached by the leaders of the two countries on the development of China-India relations, including not allowing differences between the two countries to escalate into disputes.
- The two foreign ministers held that the current situation in the border areas does not serve the interests of the two sides and the border troops of the two countries should continue dialogue, disengage as soon as possible, maintain necessary distance and ease the current situation.
- The two ministers held that the two sides should abide by existing agreements and provisions on border affairs, maintain peace and tranquility in the border areas and refrain from taking any action that might escalate the situation.
- The two sides agreed to maintain communication through the Meeting mechanism of special Representatives on the China-India Boundary Question and continue consultations on the working mechanism of consultation and coordination on China-India border affairs.
- The two Ministers agreed that, as the situation eases, the two sides should expedite the completion of new confidence-building measures to maintain and enhance peace and tranquility in the border areas.
Prior to the bilateral talks, Su and Wang attended a 90-minute lunch hosted by the Russian Foreign minister – the Alliance of Russia, India and China (RIC).
In the spirit of mutual understanding, friendship and trust, the ministers exchanged views on further strengthening trilateral cooperation between Russia, India and China, as well as on “hot issues of important international and regional significance,” according to a joint statement issued after the meeting. The ministers noted that “common development and cooperation among the three countries contributes to global growth, peace and stability,” the statement said. Recalling the video conference held on 23 June on the 75th anniversary of the victory over Nazi Germany in World War II and the founding of the United Nations, the Ministers reaffirmed “support for inclusive multilateralism” and “respect for universally recognized principles of international law”.
On September 7, local time, su jieseng said that the border situation between China and India and the relationship between the two countries “cannot be decoupled”, believing that the current tension between the two countries on the border may affect China-India relations. He also said the two sides needed to have a “very, very in-depth dialogue” at the political level on the current border situation.
The foreign ministers of China and India met for the first time since the latest round of border clashes broke out, attracting wide attention from the outside world. The tone of the meeting was much more conciliatory than the tough talk from Indian and Chinese defence ministers after their meeting in Moscow last week.
Thursday’s meeting will begin with a meeting between the foreign ministers of Russia and India chaired by Russian Foreign Minister Sergei Lavrov, The Times of India reported, hoping to break the deadlock and smoothly conduct follow-up talks between the two countries. During the meeting, the Indian side reiterated that peace along the border is a prerequisite for maintaining diplomatic relations between China and India, and stressed that any agreement reached between China and India must be a political decision and be completed through diplomatic means.
India’s defence minister, Rajnath Singh, urged all points of friction in eastern Ladakh to be restored during talks with his Chinese counterpart, Wei Fenhe, in Moscow on Friday, the Hindustan Times newspaper reported on Saturday. The talks, which lasted nearly two and a half hours, focused on how to resolve the long-running border standoff, the sources said.
Sources said the Indian delegation strongly opposed new attempts by The Chinese military to change the status quo on the southern bank of Lake Bangong in eastern Ladakh and insisted on a negotiated solution to the impasse. India wants to restore the status quo at all points of friction in eastern Ladakh.
Chinese Defense Minister Wei Fenghe met with his Indian counterpart, Rajenath Singh, on Sept. 4, Xinhua news Agency reported on Saturday. Wei said that recently the relations between the two countries and the two militaries have been seriously affected by the border issue, and it is very important for the two defense ministers to have a face-to-face and candid exchange of views on relevant issues. The cause and truth of the current tension on the China-India border are very clear, and the responsibility lies squarely with the Indian side. Not an inch of China’s territory should be lost. The Chinese military has the resolve, capability and confidence to safeguard national sovereignty and territorial integrity.
Wei pointed out that it is hoped that The Indian side will strictly abide by a series of agreements reached by the two sides, earnestly strengthen the control over front-line troops, refrain from provocations across the current LINE of actual control, take any actions that may cause the situation to heat up, and refrain from deliberately hyping up or spreading negative information.
Singh said that under the current circumstances, peace and stability along the border is of vital importance to bilateral relations. The two sides should keep the channels of dialogue at various levels, including military and diplomatic, open and solve the issue peacefully through dialogue and consultation. It is hoped that the two sides will adopt a responsible attitude, fully disengage front-line forces as soon as possible, avoid taking measures that may escalate or complicate the situation, and avoid turning differences into disputes so as to bring bilateral military relations back to the right track as soon as possible.
Analysts said that despite the five-point agreement, it was unclear whether it would reduce tensions between the two countries, which could persist for some time if the two armies failed to disengage quickly.
Indian government sources confirmed on Monday that Chinese and Indian troops opened fire during a confrontation near the Line of Actual Control (LAC) on September 7, the first time shots have been fired at the border between the two countries in decades.
“India is committed to disengaging and de-escalating the situation on the LINE of Actual Control, while China continues to take provocative actions to escalate the situation,” the Indian military said in a statement released on Tuesday. In a statement, the Indian military said it had not crossed the LINE of Actual Control at any time and had not used any offensive means including firing. Instead, the Indian military statement said, “it is the FLAGrant violation of the agreement and aggressive actions of the PLA at the same time that military, diplomatic and political contacts are still going on.”
On September 8, Chinese Foreign Ministry Spokesperson Zhao Lijian held a regular press conference. Zhao lijian said that during the incident, the Indian side first fired threatening shots at Chinese border patrol personnel, which was the first time that the calm of the border between the two countries was interrupted by gunfire since 1975. China has repeatedly stressed that the two sides should resolve their differences through peaceful means and consultation and dialogue. Confrontation is not in the interests of either side.
With no breakthrough in the negotiations among brigade commanders, the parties have agreed to hold a meeting of the army commanders for future dialogue. So far, China and India have held five military-level meetings.
India Today reported that shortly after the skirmish on the south bank of The lake on September 7, Chinese troops began a new build-up on the ridge in the finger area on the north bank of the lake. Sources said the PLA’s deployment and activities have increased significantly. In order to distinguish the complex terrain on the northern shore of The Lake, India named the extended ridge as Finger and divided it into regions from Finger 1 to Finger 8.
A senior Indian government official warned China on Wednesday that India would take necessary retaliatory action if any red lines were breached in eastern Ladakh, the Times of India reported on Thursday. He said India had further strengthened its forward positions to counter a new Chinese military build-up and threat in the high-altitude region.
In June, 20 Indian soldiers were killed in a close battle with Chinese forces in The Galvan region of Ladakh, in the worst conflict between the two countries in 50 years.