Gold investment: Japan CPI hits the central bank inflation target! Did Trump’s promise of an “October surprise” buy it?

Spot gold surged in Asian trading on Friday, hitting $1955.52 an ounce before retreating to around $1,952. Silver, meanwhile, remained in a tight range, up 0.02 percent on the day at $27 an ounce. The dollar index was trading at 92.94 after hitting a session high of 92.97. Spot gold closed at $1,943.81 an ounce, down $14.88, or 0.76 percent, after touching an intraday low of $1,932.36 and an intraday high of $1961.01 an ounce. The dollar index.DXY closed at 92.91, down 0.21 percent, having hit an intraday high of 93.62 and a low of 92.87.

Japan’s core consumer price index fell 0.4 percent in August from a year earlier, in line with forecasts, according to data released at 7:30 a.m. Beijing time on Friday. Excluding fresh food and energy prices, the CPI fell 0.1% in August from a year earlier. China’s overall consumer price index rose 0.2 percent from a year earlier, with prices excluding fresh food and energy falling for the first time since March 2017. Core CPI fell at the same rate as in November 2016. The data is another blow to the Bank of Japan’s 2 per cent inflation target, although the focus is not on inflation and the central bank is more focused on supporting the recovery.

As for the outlook for gold and silver, CIBC said on Tuesday that this summer’s impressive rally in gold and silver is just the start of the precious metals bull market. In a report, CIBC expects silver to average $25 an ounce in the third quarter of this year, $28 in the fourth quarter and $21.50 for the year as a whole. CIBC expects silver to reach $32 an ounce in 2021, $31 in 2022, $30 in 2023 and $28 in 2024.

“While we appear to be in the midst of a new round of QUANTITATIVE easing, there is significant uncertainty about the size and duration of the global recession, with real interest rates remaining below 2 per cent in the short term,” the report said. “Gold and silver prices have already reacted favourably to fundamentals, but if history repeats itself there may still be room for gains.”

In addition, further dollar weakness is another important factor supporting gold and silver prices. The dollar remains under pressure as coVID-19 is far from being contained and some pandemic stimulus measures are expected in the coming months. As the US struggles with a heavy debt burden, high unemployment and the uncertainty of a continuing trade war, the dollar’s dominance could end for some time.

Bank of Japan Governor Haruhiko Kuroda held a news conference at 14:30 Beijing time on Thursday, saying the boj would continue its loose monetary policy and that it was in close communication with the new prime minister, Yoshihide Suga. “The boj guides monetary policy through close communication with the government,” he said. That will not change under either former Prime Minister Shinzo Abe or the new prime Minister Yoshihide Suga.” Kuroda will attend an online seminar for central bank governors held by the Asian Development Bank on Friday at 15:30 Beijing time.

Fundamentals positive factors:

  1. According to world real-time statistics from Worldometers, as of 8:34 PM On September 18, the cumulative confirmed cases of COVID-19 worldwide have exceeded 30.33 million, reaching 30,333,723; The cumulative number of deaths has exceeded 950,000, reaching 950,133. The United States has the world’s highest cumulative number of confirmed COVID-19 cases, with more than 687,040, at 687, 000. The cumulative number of deaths has exceeded 202,000, reaching 202,191. On 17 September local time, a composite forecast released by the Centers for Disease Control and Prevention (CDC) indicated that between 207, 000 and 218, 000 people could die in the United States by October 10 from novel Coronavirus.

2.Global Times editor-in-chief Hu Xijin said on Twitter on Thursday that The number of Chinese casualties was “far less” than the 20 killed by Indian troops in a clash on the Himalayan border in June, contradicting the Indian defence minister’s statement. “No Chinese soldiers were captured by the Indian army, but the PLA captured many Indian soldiers that day,” he said. In addition, the Indian Express newspaper reported that Shenzhen Zhenhua Data And Information Technology Co., a company with links to the Chinese government and Communist Party, had collected the personal data of tens of thousands of Indian politicians and celebrities and built a database to conduct a “hybrid war” against India. Senior sources said that information security and privacy issues raised by incidents such as Shenzhen Zhenhua’s collection of Indian citizens’ personal information were key to the Indian government’s decision to ban Chinese mobile apps and similar decisions.

  1. Keith Krach, under secretary of State for Economic growth, Energy and environmental affairs, arrived in Taiwan Thursday afternoon, becoming the second senior U.S. official to visit the island in 2020. Two Y-8 anti-submarine aircraft of the People’s Liberation Army (PLA) Air Force entered Taiwan’s southwest Air Defense Identification Zone (ADIZ) on Wednesday, prompting the Taiwan Air force to broadcast an evacuation and use air forces to closely monitor the incident, the ministry of Defense and the Air Force command said on Thursday. According to the information provided by the Taiwan Air Force Command, the two Y-8 anti-submarine aircraft of the Communist Party of China (CPC) were concentrated in the southwest side of the Taiwan Air Defense Identification zone. The Taiwan Air Force kept track of the dynamics of the CPC aircraft and issued a verbal radio warning in coordination with the air force to expel them.
  2. On Wednesday local time, US President Donald Trump once again promised the public a “Novel Coronavirus vaccine” that will be widely distributed by the government as soon as October. This has raised many concerns about the safety of the vaccine and fears that the government is relaxing safety standards in order to rush out the vaccine before election day. A pew research center survey of 10,093 adults conducted Sept. 8 and Sept. 13 found that 51 percent said they would be willing to get the vaccine. That’s down 21 percentage points from May, when 72 percent of respondents said they would like to be vaccinated.

Fundamentals negative factors:

1.On the economy, the number of states filing seasonally adjusted initial jobless claims under regular state unemployment benefits fell 33,000 to 860,000 in the week ended Sept. 12, according to labor Department data released On Thursday. Last week coincided with the reference period for the government’s monthly jobs report. Continuing claims for unemployment benefits fell by almost 1m to 12.6m in the week to September 5th. New claims for jobless benefits resumed their downward trend last week, a sign that the battered labor market is gradually improving.

  1. Investors’ hopes of more Fed stimulus to support coVID-19 hit economies have been disappointed. The Federal Reserve signaled Wednesday that it would keep interest rates low until at least 2023, but signaled no further action. Traders are also keeping a close eye on the stimulus talks after Mr Trump hinted on Wednesday that he might support a bigger stimulus package. Senate Republicans, however, appeared reluctant to do so without more details of the bill, Politico reported.

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