On Wednesday, the DOLLAR index intraday, slightly lower, is at around 93.05. Spot gold continued to pull up short – term, gold just approached $1960 an ounce. At present, the situation between China and India is still in the spotlight. Despite the five-point consensus reached by the Foreign ministers of China and India on resolving the long-standing border deadlock, the overall situation of the friction points in eastern Ladakh remains unchanged and the situation is still quite tense. The safe-haven nature of gold has been supported by geopolitical tensions. Investors will be focused on the Fed’s monetary policy decision and Powell’s press conference, which is expected to leave policy unchanged, but Powell’s tone is likely to be dovish, which could hurt the dollar and push gold higher. Investors will also be focused on U.S. retail sales data due late Wednesday, Beijing time, which is known as the “terror data” and is expected to stir market volatility ahead of the Fed’s decision.
Gold rebounded to near $1,960 an ounce
Gold prices retreated from near two-week highs on Tuesday as the dollar strengthened, though expectations of a dovish stance by the Federal Reserve capped losses in safe-haven metals. Spot gold closed Tuesday at $1953.61 an ounce, down $1.59, or 0.08 percent, after hitting an intraday high of $1972.00 an ounce, its highest level since September 2.
“The dollar has bounced off its lows and gold has seen some selling, but that’s temporary,” said Bob Haberkorn, senior market strategist at RJO Futures in New York. “The dovish comments from the Fed meeting and further explanations of its new inflation target could push gold above $2,000.”
Spot gold continued to rebound in the short term, hitting as high as $19,999.81 an ounce in Asian trading on Wednesday as the dollar weakened again.
In addition to the Fed decision, investors will also be watching U.S. retail sales reports on Wednesday, which are expected to have an impact on the dollar and gold.
U.S. retail sales data for August will be released on Wednesday at 20:30 Beijing time. U.S. retail sales are expected to rise 1 percent in August, compared with a 1.2 percent rise, according to a media survey.
Gold faced solid resistance at $1967.90 an ounce on Tuesday, a significant retreat from that level, and tested bullish channel support, according to Economies.com. It is now waiting for gold to resume its main bullish trend and break through the above resistance to confirm the continued bullish trend of gold prices. A break above $1967.90 would see gold heading towards $2008.00 an ounce.
Jeffrey Christian, managing partner at CPM Group, said gold prices would continue to rise due to political uncertainty in the United States, Brexit and weakness in the overall global economy.
Analysts and traders are uniformly bullish on gold’s outlook for the week, according to the WEEKLY FX168 Financial Market Survey released on Saturday. Among traders and analysts surveyed weekly by financial markets, 80 per cent were bullish on gold and 20 per cent were consolidation.
Kitco’s latest gold survey on Friday showed a surge in bullish sentiment among retail investors as the metal’s trading range continued to narrow. Retail investor confidence rose to its highest level in a month. A total of 1,359 people took part in the online survey. Of those surveyed, 926, or 68 per cent, expected gold prices to rise this week. Another 205 (15 per cent) said they expected gold prices to fall, while 228 (17 per cent) were neutral.
Lukman Otunuga, senior research analyst at FXTM, said in an interview with Kitco News on Tuesday that it would be difficult to see short gold because strong fundamentals would drive prices higher. He added that economic uncertainty, geopolitical instability and increased stock market risks surrounding the Novel Coronavirus pandemic will continue to support safe-haven demand for gold. He also noted that rising inflationary pressures are now another strong pillar of support.
Beware of Fed dovishness
The FEDERAL Open Market Committee will announce its interest rate decision at 02:00 Beijing time on Thursday. Federal Reserve Chairman Colin Powell will hold a press conference at 02:30 Beijing time on Thursday.
“There is a risk that the Fed meeting will be dovish,” said Edward Moya, senior market analyst at OANDA in New York. You could find the dollar vulnerable before the Fed raises rates.”
“The Fed is expected to maintain its inflation target, we’re going to be at 2 percent inflation for some time, they’re going to increase their quantitative easing purchases, so gold will remain supportive on that basis,” said Phillip Streible, chief market strategist at Blue Line Futures.
Td commodity analysts said they expected the Fed to continue to reiterate its ultra-loose stance. Td analysts said in a note on Friday: “We expect this week’s FOMC to clear a second hurdle for gold bulls, as officials should send dovish signals through the language on QE, the extension of the dot plot to 2023 and the chairman’s press conference.”
James Steel, chief precious metals analyst at HSBC, said: “Real interest rates will remain negative. In the current low interest rate environment, holding non-yielding assets such as gold becomes more attractive.”
Michael Matousek, chief trader at U.S. Global Investors in New York, said, “It’s optimistic right now because Investors think low interest rates are here to stay for more than three years. That’s very good for gold.”
Economists at Nomura note that while they do not expect the Fed to announce any major monetary policy announcements this week, the meeting will be important as the Fed releases its latest economic forecasts, including for 2023. “We believe that key long-term issues will be discussed at the September meeting, but major policy innovations will have to wait until later this year to be announced,” the economists said.
Bloomberg economists said that the upcoming FOMC meeting in September is expected to adopt new prospective guidance, similar to the committee is expected to keep the federal funds rate between 0% and 0.25%, at least as long as the job is lower than the highest level of real-time forecast, until inflation averaged over time the committee’s target of 2%, long-term inflation expectations will remain stable.
The Fed’s assessment of “considerable risks” to the medium-term economic outlook is likely to remain in the statement. The economic forecast summary will extend the forecast to 2023, possibly raising the GDP growth forecast for 2020 and lowering the unemployment forecast. The trend forecast by the Federal Funds Rate Centre is likely to continue to indicate that rates will remain at the zero lower bound in 2023, although the trend is likely to continue to rise from 2022.
Ubs said it expected the Fed to issue forward guidance at its meeting this week indicating that the federal funds rate would remain at zero until it predicted one-year inflation of at least 2.25 per cent. In addition, the Fed is expected to extend its Treasury purchases by five years or more.
New information has come from the situation between China and India
New Delhi: From mules to large transport aircraft, the Indian military has activated its entire logistics network to deliver supplies to Indian troops along the China-India border to survive the coming winter, Reuters reported on Wednesday. Indian officials say large quantities of ammunition, equipment, fuel, winter supplies and food have been brought into Ladakh in recent months.
The move is related to an earlier stand-off between India and China in Galawan. The standoff began in May and escalated into hand-to-hand combat in June. Twenty Indian soldiers were killed, while an unknown number of Chinese soldiers were killed.
China and India are negotiating to resolve the conflict, but neither side has budged. The Indian military is now preparing to deploy troops along the dangerously high-altitude border throughout the winter. The clashes took place in eastern Ladakh, where there are usually between 20,000 and 30,000 soldiers. But an Indian military official said the number had more than doubled as tensions rose, though he declined to provide an exact figure.
“We have responded to the increase in The Chinese military,” the official said. He added that the Indian military was fully prepared but did not want the conflict to escalate or continue. Temperatures in Ladakh can be well below freezing, and troops are often deployed at altitudes of more than 15,000 feet, where oxygen is scarce, officials said. The Indian military has delivered more than 150,000 tons of supplies to the region.
“All the supplies we need have been sent to where we need them,” said Maj. Gen. Arvind Kapoor, chief of staff of the Army’s 14th Regiment.
On the afternoon of September 15 local time, Indian Defense Minister Rajnat Singh addressed the Parliament on the China-India border issue, saying that both China and India believe that maintaining peace and tranquility in the China-India border areas is of vital importance to the further development of bilateral relations.
Mr Singh told Parliament That India had made it clear to China that it would protect its “sovereignty and territorial integrity” at any cost. “We want peace, but we are prepared for all possible scenarios,” Singh said. We should be confident that our armed forces will manage the situation successfully.”
Beijing: China’s armed forces along its disputed border with India have raised their combat readiness level to the second highest level after last week’s exchange of fire, but the alert level was lowered after the two countries’ foreign ministers met, military sources said on Wednesday, according to a new report in the South China Morning Post.
A military source told the South China Morning Post that the move to level 2 meant more weapons and troops were being deployed to the front line, as well as increased training exercises for commanders, officers and soldiers.
The last time the PEOPLE’s Liberation Army used such a high level in the volatile region was in 1987, when a skirmish in the Sumdorong Chu valley brought the two sides to the brink of war, said the person, who asked not to be named. The PLA has four combat readiness levels, three combat readiness levels, two combat readiness levels and one combat readiness level. Level 1 combat readiness is the highest level. Level 1 readiness is used only when military leaders are convinced that armed conflict is inevitable.
“Commanders, officers and soldiers have been working around the clock for additional training and exercises since the readiness level was raised,” the source said. “The PLA is bringing more troops and weapons systems to the Line of Actual Control to prepare for the worst.”
Another source said the high state of alert was eased after Chinese Foreign Minister Wang Yi met his Indian counterpart Sujaishankar on the sidelines of the Shanghai Cooperation Organization summit in Moscow last week. In a joint statement, the Indian and Chinese foreign ministers said tensions along the border did not serve the interests of both sides.
While combat readiness levels have been reduced, another source said they could be restored if conditions change. “The level could be determined by the troops on the border, as it was before the skirmish in 1987, when it was adjusted several times,” the person said.
Indian government sources confirmed last Monday that Chinese and Indian troops opened fire during a standoff 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 disengagement and de-escalation of 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 last Tuesday.
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.
During their meeting last week, Chinese and Indian foreign ministers agreed on a five-point plan to resolve the long-running confrontation in eastern Ladakh, including abiding by all existing border management agreements and protocols, maintaining peace and tranquility, and avoiding any actions that could escalate the situation.
India’s Foreign ministry released a joint statement on Friday that contained five points agreed by the two sides in “frank and constructive” discussions. “The two foreign ministers agreed that the current situation in the border area is not in the interests of both sides,” the statement said. They therefore agreed that the border forces of the two sides should continue their dialogue, quickly disengage, maintain appropriate distance and de-escalate tensions.
Indian Prime Minister Narendra Modi delivered a tough message on the China-India border dispute in a traditional speech before a parliamentary session, Indian media NDTV reported Monday. “We hope that the parliament and all its members will unite and send the message that the country stands with our soldiers,” Modi said.
“Our soldiers stand at the border to defend the homeland with great courage, enthusiasm and determination,” Modi said. They were standing on high ground, and snow was coming in a few days. In the same way, I am confident that Parliament will send a message with one voice that it stands firm behind the soldiers who guard our borders.”
NDTV reported on Friday that sources said India was “strongly concerned about the build-up of Chinese troops along the LAC” during a meeting in Moscow last Thursday evening local time between Indian Foreign Minister Sushil Jaishankar and Chinese Foreign Minister Wang Yi.
According to the website of the Embassy of the People’s Republic of China in India on September 14, Ambassador Sun Weidong made remarks on recent media inquiries and bilateral meetings between Chinese and Indian foreign ministers. Referring to the consensus reached in previous meetings between the two leaders, Sun Weidong said the two sides should “pursue win-win cooperation” rather than a “zero-sum game”.