Asian shares fell broadly on Friday, failing to extend a rally on Wall Street the day before, while the dollar came under a bit of pressure and spot gold, after two days of losses, tried to rebound and was trading near $1,875 and silver extended gains to 1 per cent.
At present, gold market volatility and the dollar is particularly close. At present, the epidemic situation in Europe and the US and the ELECTION in the US have become the most important themes for the market.
As the US campaign enters its final stretch, the epidemic in the US also appears to be accelerating.
At least 91,248 new cases of COVID-19 were confirmed in the United States on Thursday, the biggest one-day increase since the outbreak began, according to Reuters statistics. Since the coVID-19 outbreak began, the United States has had more than 8.94 million confirmed cases of COVID-19, ranking first in the world.
The Coronavirus that is ravaging the United States is spiraling out of control just days before the presidential election, the New York Times reported. More cases have been reported in more than 20 states over the past seven days than at any time during the outbreak.
Meanwhile, Hans Kluge, the WHO regional director for Europe, revealed after a meeting with EU health ministers that the cumulative number of confirmed cases across Europe had exceeded 10m, with an increase of 1.5m last week, an all-time high in hospital admissions and a worrying rise in deaths of more than 30 per cent in the past week.
In addition to the pandemic, concerns about Washington’s slow progress in rolling out more fiscal stimulus and the outcome of next Tuesday’s US presidential election have also helped maintain high volatility in US equity markets.
In a letter to Treasury Secretary Steven Mnuchin on Thursday, House Democratic Leader Nancy Pelosi said she was still waiting for answers from Mr. Mnuchin on some points of disagreement. The White House dismissed Ms Pelosi, saying she had no intention of backing down. Mr. Mnuchin, responding to Ms. Pelosi’s letter on Thursday, said that Ms. Pelosi had used a “political gimmick” during the negotiations to pursue an all-or-nothing negotiating approach.
In his letter, Mr. Mnuchin said he had “spent a great deal of time and energy trying to reach a compromise,” but that he did not believe Democrats had made the same effort to find consensus. Contrary to Pelosi’s comments, The White House did accept the Democrats’ proposal on the novel Coronavirus test and offered a “reasonable compromise position” on other issues Pelosi highlighted, Mr. Mnuchin said.
Mr Mnuchin’s tussle with Ms Pelosi is seen as a sign that congress is unlikely to reach a rescue plan before and after the November 3 election.
Moreover, as the US election approaches, markets are increasingly nervous. The VIX rose on Monday on fears of a close race in the US presidential election. With Wednesday’s gains, the index has surged nearly 13 points this week. Wall Street’s ‘fear index’ may have posted its biggest weekly gain since March.
“The market is facing a perfect storm,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina.
“It’s the surprises that are really causing the volatility,” said Christopher Murphy, co-head of derivatives strategy at Susquehanna Financial Group. The coVID-19 wave seems to have caught the market a little off guard.”
On the daily chart, the DOLLAR index is now trading below the 94 level after two days of strong gains. Daily chart MACD red kinetic energy column gradually expanded, KDJ random indicator above 50 level, indicating the strengthening of short-term bullish momentum, prices may further rebound.
On the 4-hour chart, the DOLLAR index.DXY has retreated since hitting a high of 94.11 and is still above its major moving average, with a focus on the 100-period average supporting 93.50. The MACD red momentum column weakened slightly, with KDJ stochastic trying to move down from the overbought level, indicating a slowdown in bullish U.S. dollar momentum and a near-term or consolidation.
On the daily chart, gold is trying to stabilize after two straight days of heavy losses and is trading near $1,875, with an eye on the 100-date moving average resistance at 1889 levels. The daily MACD green momentum column expanded slightly, with the KDJ stochastic approaching the oversold level, indicating that gold bearish momentum has strengthened and is now prone to choppy declines.
On the four-hour chart, gold’s fall was particularly sharp, at one point dipping below $1,858 to see if it could hold on to that support. The MACD red momentum column is gradually weakening and the KDJ random index is trying to rebound from the oversold level, indicating a short term or correction in gold.
On daily charts, silver fell as low as $22.58 before closing above $23, watching to see if it could secure its 100-day moving average of $23.50. The daily MACD green momentum column showed initial signs, with the KDJ random index falling below the 50 level, indicating silver bearish momentum remains or further volatility.
In the 4-hour chart, silver rebounded from a low of $22.58, with short-term resistance above its 20-period average. MACD green momentum column gradually weakened, KDJ random index rebounded from the oversold level, indicating silver bearish momentum weakened, short term or further correction higher.
Fundamentals positive factors:
- At least 91,248 new confirmed coVID-19 cases were reported in the United States on Thursday, according to Reuters, the largest single-day increase since the outbreak began. Since the coVID-19 outbreak began, the United States has had more than 8.94 million confirmed cases of COVID-19, ranking first in the world. — Risk aversion triggered by the worsening epidemic is good for gold.
- As coVID-19 continues to worsen in Europe, German Chancellor Angela Merkel announced a new round of local lockdown across the country for one month next Monday. In addition, France imposed a nationwide city lockdown from Friday until December 1. — Risk aversion triggered by the worsening epidemic is good for gold.
- The U.S. Department of Justice has indicted eight Chinese nationals for allegedly engaging in a Fox hunt in China, threatening, harassing, monitoring and intimidating a number of Chinese nationals in the United States and forcing them to return to their homeland for trial. — Risk aversion due to china-us tensions has supported gold prices.
Fundamentals negative factors:
- In a letter to Treasury Secretary Steven Mnuchin on Thursday, House Democratic Leader Nancy Pelosi said she was still waiting for answers from Mr. Mnuchin on some points of disagreement. The White House dismissed Ms Pelosi, saying she had no intention of backing down. Mr. Mnuchin, responding to Ms. Pelosi’s letter on Thursday, said that Ms. Pelosi had used a “political gimmick” during the negotiations to pursue an all-or-nothing negotiating approach. — The pre-election stimulus package is bearish for gold.
- The U.S. Commerce Department released figures for U.S. GROSS domestic product (GDP) in the third quarter, which grew at an annualized rate of 33.1 percent, the best on record. — Better-than-expected U.S. GDP boosts risk sentiment and bears gold.
- Global gold demand fell 19 per cent year-on-year to 892 tonnes in the third quarter of this year, the World Gold Council said today in its gold demand trends report. That was the lowest quarterly aggregate demand since the third quarter of 2009. — Falling demand for gold is bad for gold prices.