On Tuesday, gold was relatively calm in early Asian trading. After the previous session’s big wobble, intraday gold staged a small rally from its lows.
Gold rose nearly 1 percent in the previous session, its biggest one-day fall in nearly seven years on Friday, as expectations rose that the us federal reserve and other central Banks would ease monetary policy to boost the global economy, which has been hit by public health incidents.
Gold fell sharply after surging higher as the outbreak of pneumonia ignited global risk aversion, falling as much as 4.5 percent on Friday as traders liquidated positions.
Recession fears under the outbreak intensify fed rate cuts are imminent!
“We are seeing a small rebound since the end of last week, when there was a lot of selling to cash out and cover margin,” said Ryan McKay, commodity strategist at td securities. Expectations of fed rate cuts, as well as those of other global central Banks, are high and very supportive.
McKay said gold is overextended, so no one is chasing it. On the one hand, those who had been long above $1,680 were likely to walk away, on the other hand, a number of profitable investors would take profits. Ultimately, after the initial sell-off, the gold market will move higher and may see a bottom this week.
McKay said the development of the global epidemic could prompt central Banks to become more aggressive and cut interest rates more aggressively, and that gold remained a good long-term hedge against low interest rates.
Jeff currie, global head of commodities research at Goldman sachs, said one thing was clear on Monday: gold was immune to a new outbreak of pneumonia. But the rally will continue as long as uncertainty about the impact of the outbreak persists. Last week, Goldman sachs raised its 12-month gold forecast to $1,800 an ounce.
Jan Hatzius, chief economist at Goldman Sachs, said on Monday that the outbreak would most likely tip the global economy into recession, where it could shrink by “about a quarter” but rebound before officially entering a recession. There are downside risks that could tip the global economy into recession.
Hatzius said there is clearly a lot of uncertainty right now, and a lot of it is in areas where economists don’t normally make judgments, such as health care, and that uncertainty puts pressure on the fed and other global central banks to find ways to support the global economy. Most major central banks are expected to cut interest rates, and a concerted effort may be the wisest approach they take.
The outbreak of pneumonia is dragging the global economy into its worst growth slowdown since the global financial crisis, the organization for economic co-operation and development (OECD) warned on Monday, urging governments and central banks to take steps to avert a deeper recession.
On Friday, federal reserve chairman colin Powell said the FED would “take appropriate action” to support the economy; Interest rate futures markets are now pricing in a 100 percent chance that the fed will cut rates by 50 basis points at its March 18 policy meeting.
According to CME fed watch, there is a 100% chance that the fed will cut rates by 50 basis points to 1.00% to 1.25% in March. There is a 26.1 percent chance of a 50 basis point cut to 1.00% to 1.25% by April, and a 73.9 percent chance of a 75 basis point cut to 0.75% to 1.00%.
Meanwhile, U.S. national economic adviser Jeffrey Kudlow and U.S. Treasury Secretary Steven Munchin recently expressed support for the fed’s emergency rate cut.
Nicky Shiels, the commodities strategist at Bank of Scotiabank in Toronto, thinks gold has further to go. The bank raised its forecast for gold prices this year to $1,750 an ounce, for a full-year average of $1,625, up about 1.5% from its previous forecast.
In the medium to long term, a rise to $1,900 an ounce is not out of the question, Shiels said.
South Korea has confirmed 477 new cases of the coronavirus, bringing the total number of infections to 4,812 and 29 deaths, according to the country’s health ministry. A total of 600 new cases were reported on Tuesday.
Meanwhile, 102 new cases of coronary pneumonia were reported in the United States. Forty-five cases have been confirmed from the Japanese diamond princess and three from evacuees in wuhan, China, as well as 54 U.S. cases in 11 states. Local health officials say at least four new cases of pneumonia have died in Washington state, bringing the total number of deaths in the United States to at least six, as the coronavirus that is spreading through communities near Seattle.
According to CNN’s latest update, the city of Redmond, Washington, has declared a state of emergency because of the new coronavirus. But the state of emergency does not require immediate changes by the government or residents, the report said. Redmond says the announcement is intended to make it easier to request more resources to deal with the new coronavirus. Earlier, a state of emergency was declared in SAN Antonio, Texas.
The world health organization (WHO) said recently that the situation outside China is not optimistic. The number of new cases of coronary pneumonia in China continues to decline, but the situation outside China is not optimistic, who director-general tandsai said Wednesday. The number of new cases of coronary pneumonia outside China in the past 24 hours was almost nine times that within China. Outside China, the total number of cases in 61 countries has now exceeded 8,739, including 127 deaths. About 81 percent of the cases outside China have come from four countries, with South Korea, Italy, Iran, and Japan being the most worrisome.
South Korea already accounts for more than half of reported cases outside China, he said. But the south Korean cases appear to have come mainly from suspected cases in five known clusters, rather than from the community. This is important, and it shows that surveillance measures are working and that the outbreak in South Korea can still be contained.
In Iran, a team from the world health organization has arrived in Iran to support preparedness efforts. An employee of the who office in Iran has been confirmed with mild symptoms.
And according to the Arab state television on March 3, the former adviser of Iranian foreign minister zarif, Iran’s senior political figure hussein shaikh islamic confirmed the infection of the new coronavirus. Sheikh Islam was a senior adviser to the Iranian foreign minister mohammad javad zarif and previously served as Tehran’s ambassador to Syria. Recently, a number of senior officials in Iran have been infected with the new coronary pneumonia.
Super Tuesday is coming!
Next, in addition to concerns about the spread of the new pneumonia outbreak abroad, the U.S. election began to take center stage. There are 15 us democratic primaries starting this week and there is speculation that the democratic candidate Bernie Sanders is likely to win. Tuesday, also known as “super Tuesday,” is the most important day in the U.S. presidential primary process, when 14 states hold primaries to determine more than a third of the Democratic Party’s delegates.
Sanders could be the big winner on Super Tuesday, which some investors on Wall Street believe will disrupt the stock market. Sanders, 78, has his last chance at the 2020 presidential election. After securing the Democratic Party’s presidential nomination, he is expected to defeat Mr. Trump.
The market is in part worried about a victory for Mr. Sanders, who wants to create universal health insurance and may cut military spending, which has increased under Mr. Trump.
Morgan Stanley wrote in a recent research note: “it seems too early to predict a front-runner or a winner among multiple democratic contenders, and investors need to remain wary.”
As Super Tuesday approaches, the candidates for the 2020 us presidential election are already gearing up for a major primary battle, according to china.com. According to data released by NBC News and Marist pollster, the democratic candidate Bernie Sanders holds the lead in Texas, a state with 228 delegates that is seen as a strong influence on the race for the Democratic nomination.
The Democratic senator from Vermont has the support of 34% of primary democratic voters in Texas, according to the poll. He also leads former Vice President Joe Biden by a hefty 19 percent. But previous analyses have suggested that more conservative Democrats, such as Biden and Bloomberg, have a better chance of winning in Texas.
Bloomberg and senator warren of Massachusetts was next with 15 percent and 10 percent, respectively, according to the data. The candidates have reportedly invested a lot of time and resources in Texas. The state has 228 delegates, second only to California’s 415.