International spot gold was trading in the $1,746 an ounce area on Thursday morning in Asia, continuing a volatile uptrend. Gold ended the session higher for the second straight day at $1,746.79 an ounce.
The last session of international spot gold sub-market opened at $1743.57 / oz in the morning, the highest to $1753.70 / oz, the lowest to $1741.80 / oz, closed at $1746.97 / oz, up $2.97, or 0.17%.
Meanwhile, COMEX June gold futures ended up 0.37 percent at $1,752.10 an ounce.
Gold extended its rally after minutes from the federal open market committee’s April meeting showed fed officials discussing a more explicit future path for interest rates. With the fed’s benchmark interest rate between zero and 0.25 per cent, negative rates are a good thing for precious metals.
Fed officials point out that the virus has done undue damage to the economy and could do harm in the future.
“Participants commented that, in addition to the significant short-term impact on economic activity, the economic impact of the pandemic created considerable uncertainty and posed considerable risks to economic activity in the medium term,” the minutes said.
One area of particular concern is what to do if coronavirus infections surge later this year. The minutes noted that the “more pessimistic” forecast of a rebound was likely to be the same as the underlying forecast of an improvement in the economy.
“In this scenario, the second coronavirus outbreak is expected to begin at the end of the year, triggering a new round of severe restrictions on social interactions and business operations, which will lead to a reduction in real GDP, a surge in unemployment and renewed downward inflationary pressure next year,” the minutes added.
Powell’s speech revealed a number of concerns, the dollar was again hit by a crash to a low of 99.00, gold further volatile gains.
“We are seeing gold and silver and other precious metals continue to respond positively to central bank and government stimulus, particularly [fed] chairman Colin Powell’s recent comments about using all available tools,” said Colin Cieszynski, chief market strategist at SIA Wealth Management in New York.
ANZ strategists said gold could see a safe-haven bid amid weak economic data. Powell, chairman of the federal reserve’s pessimistic, precious metals prices, Powell warned the senate committee, the current recession than any recession since the second world war is serious, long-term unemployment may damage the economy, and reiterated was determined using a variety of means to support the economy, including before the economy returns to normal interest rates near zero, the safe-haven buying remains strong, pushing the prices once to above $1750.
“As soon as speculators get their hands on the news about the novel coronavirus vaccine, they are exaggerating,” Naeem Aslam, chief market analyst at AvaTrade, wrote in a report on Wednesday. But when optimism fades and reality becomes apparent, investors have little choice but to hedge their bets.”
Silver was also doing well, Mr O ‘byrne said, given “strong investment demand” and “safe-haven demand in anticipation of a severe recession”.
Gold prices continued to rise on Wednesday as bulls continued to be encouraged by a broad range of economic stimulus measures in major countries and uncertainty over covid-19 vaccines. However, gold’s gains were limited to some extent as major countries gradually reopened their economies, raising hopes of an economic recovery and improving risk appetite.
David Meger, head of metals trading at High Ridge Futures, said the fact that demand for safe-haven assets such as gold has declined and that the metal continues to rise slowly speaks volumes about its underlying momentum coming from the idea of central Banks and the economy pumping liquidity across the board.
Major stock indexes retreated from their intraday highs on Wednesday after the U.S. senate passed a bill to tighten regulation of Chinese companies. The senate on Wednesday passed a bill that could block some Chinese companies from listing on U.S. exchanges unless they comply with U.S. auditing and regulatory standards.
Shares of us-listed Chinese companies bucked the trend, with baidu, iQIYI and alibaba falling between 0.2% and 5.4%.
The bill still needs to pass the house of representatives and be signed by President trump to become law.
If a company fails to meet the audit requirements of the public company accounting oversight board for three consecutive years, the foreign company accountability act would bar the company from listing its securities on U.S. stock exchanges.
The measure would also require listed companies to disclose whether they are owned or controlled by foreign governments.
In addition, the U.S. house of representatives is expected to vote next week on changes to small business wage protections, according to media reports.
House speaker Nancy pelosi said Wednesday that a bipartisan bill could be voted on next week. The proposal aims to make the popular small business wage protection program more flexible and extend its use.
Moving forward with the republican-backed bill could break a deadlock in congress over whether to approve a new coronavirus assistance bill. The democratic-controlled house of representatives passed a new $3 trillion bailout bill last week.
Senate republicans voiced support this week for changes to the small business wage protection program. The chairman of the senate small business committee Marco rubio says there is a strong consensus that change is needed.
“Businesses are starting to open their doors again,” rubio said at an event at the American enterprise institute on Tuesday. “in just a few weeks, they can rehire everybody.”
By the democratic senator from Minnesota Dean Phillips and republican senator from Texas Chip “wage flexibility protection act”, proposed by Roy will allow accepting can forgiving enterprise of the eight weeks longer than the original plan in using the funds, and relax the requirements to be used to pay wages are 75% of the loan. The bill would also give them more than two years to repay their loans.
Golden aftermarket outlook
Analysts at Credit Suisse believe gold has completed a small bullish triangle continuation pattern above $1,747, and while there are concerns about momentum and positions, the uptrend is expected to continue, with the next test at $1,796 to $1,803, marking the beginning of a new consolidation phase. Overall, gold is expected to break through $1,921 and hit a record high, with the next resistance being the $2,000 psychological barrier and the $2,075-80 area. On the downside, support is at $1,660, which needs to be maintained to maintain the current upward trend.
Afshin Nabavi, senior vice President of precious metals trading at MKS SA, said, “the world situation remains tense as far as coronavirus is concerned. The economic outlook, the low interest rate environment and the falling stock market are all driving gold higher.”
“Powell indicated that all emergency lending programs will end by the end of the month and the fed and congress may need to pump more money into the economy,” said Edward Moya, senior market analyst at Oanda. “The fed is far from finished pumping stimulus money into the economy, which is clearly good for gold prices.”
Afshin Nabavi, senior vice President of precious metals trader MKS SA, said, “the atmosphere around the world remains tense due to the impact of the epidemic. The economic outlook and the lower interest rate environment, and the lower stock market are helping the gold price higher.”
As Circle Squared Alternative Investments points out, “the fundamentals in history have never been more bullish for gold than at this point in time, and unless we get better news about vaccines, we will start to see gold’s upward momentum build. Any news that businesses are back to work and hoping for a pullback will hurt the economic outlook and boost gold prices.”
Analysts at FXTM wrote that gold is set to shine this week as investors take a more cautious approach to riskier assets. Gold has found solace around $1,750, a level not seen in more than a year, and could move higher if risk aversion returns in full swing. Technically, a move above $1,765 could trigger a move toward $1,770.