Gold prices opened slightly higher at $1,934.61 an ounce in early Asian trading on Monday. However, in the absence of a major catalyst, coupled with a stronger dollar, buyers remain cautious about gold’s rise.
Chip wars between China and the US, brexit talks start again
On Friday, media reported that the Trump administration had blacklisted SMIC, a Company backed by the Chinese government, adding to the tension between the US and China. Smic later issued a statement in response. ‘SmIC is an international integrated circuit manufacturer that is listed on both the Hong Kong Stock Exchange and the A-share market. Smic strictly abides by relevant national and regional laws and regulations,’ the statement said. It also expressed its willingness to communicate with relevant US government departments in a sincere, open and transparent manner to resolve possible differences and misunderstandings.
The chip war between China and the U.S. also hit stocks, leading to a continuation of last week’s losses, with S&P 500 futures down 0.26 percent and NASDAQ futures down 0.82 percent.
More recently, investors have also been gripped by worrying headlines about Brexit. Boris Johnson, the British prime minister, has set an October 15 deadline for a trade deal with the EU that, if not respected, could lead to a “no deal Brexit”. Separately, the FT reported that the UK is planning new legislation that would overturn key parts of the Brexit deal. The move could “clearly and consciously” undermine the Northern Ireland agreement signed by Mr Johnson last October to avoid the re-emergence of a hard border in the region. That could heighten tensions between the two sides.
As North America enters its Labor Day holiday, will the epidemic erupt again?
Monday’s Labor Day holiday in the U.S. and Canada could limit market moves. But as autumn approaches, temperatures drop and flu season arrives, investors are worried that the holiday season could trigger a new wave of outbreaks.
“We don’t want to see a repeat of the surge we saw after the previous weekend break,” White House health adviser Dr. Anthony Fauci said Thursday. “We don’t expect to see a surge under any circumstances, especially as we move into the fall after Labor Day.” He added that states such as Montana, Dakota, Michigan and Minnesota have recently reported an alarming increase in the number of people aged 19 to 25 who have tested positive.
In addition, the U.S. is in the midst of hurricane season, which is also contributing to the accelerated spread of the disease. The U.S. National Hurricane Center says the hurricane season peaks in mid-August and late October. This season, Hurricane Laura has displaced hundreds of thousands of people in Texas and Louisiana, forcing at least a few thousand into potentially crowded shelters, greatly increasing the chances of spread. Other natural disasters, such as hurricanes and wildfires in the West, have also disrupted the ability of state health officials to respond to local outbreaks and contain the virus. Louisiana Governor John Bel Edwards said last week that the state has also closed many COVID-19 testing centers as a result of the hurricane.
Can economic data remain strong?
Nonfarm payrolls rose 1.37 million in August and the unemployment rate fell to 8.4%, the lowest level since the Novel Coronavirus lockdown in March, data released Friday showed, as the economy continued to climb out of a broad economic downturn.
Trump and pence have both responded. “This is another great day for American jobs and American workers,” VICE President Mike Pence told CNBC. Pence added that job growth and single-digit unemployment are “real evidence that the U.S. economy is recovering.” US President Donald Trump tweeted: “Great jobs Numbers! 1.37 million new jobs were created in August. The unemployment rate fell to 8.4%(wow, much better than expected!). . The speed and depth of breaking 10 per cent is beyond anyone’s imagination.”
China’s trade account, expected to be released today, will provide a direct guide to the market.
On Tuesday, Japan and the euro zone will release their latest GDP figures. That would provide enough stimulus for the market. Analysts’ consensus forecast is for a further 12.5 per cent contraction in THE second quarter. In addition, the U.S. producer price index and consumer price index will be released on Thursday and Friday respectively, which will also have an impact on gold prices.