In Asian trading on Thursday, spot gold fell from a high near $1,955 and just lost its 1940 mark, while silver extended its losses to below $27.
Gold surged more than $20 yesterday to pass the crucial 1950 benchmark, up more than 1 per cent on the day, as investors bet on more stimulus measures.
The focus is already on today’s speech by Federal Reserve Chairman Colin Powell. Powell will deliver a speech on the theme of “Monetary Policy Framework Review” at 21:10 P.M. Beijing time on Thursday. It was Mr Powell’s first public appearance since the Fed’s policy meeting in late July, and the market was focused on whether he would mention the revision of inflation expectations to pave the way for looser monetary policy.
If Mr Powell suggests a move to an average inflation target, which would lead to a fed policy of low interest rates for the next 42 years, the dollar would have little chance of a meaningful rebound in the short term and gold could take the chance.
OANDA analyst Ed Moya said gold could challenge $2,000 this week if Powell’s comments did not disappoint.
Conversely, if Mr. Powell doesn’t hint at a possible correction Thursday, investors may be disappointed and there is some risk to the dollar’s upside.
In addition to watching Powell’s speech, markets are still closely tracking further news on the situation in China and the United States.
China fired a number of missiles into the South China Sea on the morning of August 26 Beijing time, after what it said was a us reconnaissance aircraft trespassing into the no-fly zone of the People’s Liberation Army’s Northern theater Command for live-fire exercises. 26 then, the U.S. government, announced the sanctions by the south China sea issue 24 Chinese enterprises, and claims that will continue to support the south China sea littoral countries maintaining sovereignty.
According to Hong Kong’s South China Morning Post on August 26, a source close to the Chinese military said that China fired two missiles, including an “aircraft carrier killer”, into the South China Sea on the morning of Beijing time, sending a clear warning to the United States.
China fired four medium-range ballistic missiles into the South China Sea on August 26 as the People’s Liberation Army (PLA) was conducting large-scale military exercises, Bloomberg and Reuters reported, citing an unnamed US defense official.
After China launched the missile, the US RC-135s reconnaissance plane, which is specialized in tracking the trajectory of missiles and rockets, went from Bashi Strait to the South China Sea this morning and flew back to its station around noon. It is understood that the RC-135s reconnaissance plane came to detect and search the electronic parameters of the BALLISTIC missiles launched by the PEOPLE’s Liberation Army.
Meanwhile, the Trump administration announced on June 26 that it has added 24 Chinese companies to its sanctions list and imposed visa restrictions on 12 Chinese nationals involved in the construction of artificial islands in the South China Sea.
Us-china tensions over the South China Sea have escalated as Beijing fired four missiles into a disputed waterway and Donald Trump’s administration stepped up action against Chinese companies helping to build artificial islands in the region, Bloomberg said on Aug. 26.
It is the first time the US has imposed such sanctions on Beijing over a disputed strategic waterway in the South China Sea, Reuters commented.
On the daily chart, the U.S. dollar index.DXY was trading around 92.90 after two straight days of losses. The daily chart MACD red kinetic energy column was basically stable, while the KDJ random index held steady above the 50 level, indicating that there is still room for a rebound.
On the 4-hour chart, the DOLLAR index fell to 93 yesterday after falling back to all below the average, watching whether the 50 average can be broken. The MACD green momentum column gradually expanded, with the KDJ stochastic approaching the oversold level, indicating that bearish momentum on the DOLLAR strengthened and a short-term oversold rebound is expected.
On daily charts, gold rallied strongly from its lows yesterday but failed to break through 20-day resistance. The daily MACD green momentum column weakened slightly, with the KDJ random index falling below the 50 level, indicating a slowdown in bearish momentum for gold, although downside risks remain.
On the 4-hour chart, gold continued to climb near its 50-period moving average yesterday. Watch to see if it can break through this resistance. The MACD red kinetic energy column was basically stable, and the KDJ random index was approaching the overbought level, indicating that the bullish momentum of gold is stable, short term or further consolidation.
On daily charts, silver fell slightly after yesterday’s advance, losing $27 on the day. Daily chart MACD green momentum column slightly weakened, KDJ random index held steady near the 50 level, indicating silver bearish momentum weakened, price may further volatility.
On the 4-hour chart, silver’s rally yesterday took it above all its moving averages, although the 60-session averages are now being tested. The MACD green momentum column was largely stable, with the KDJ random index trading below overbought levels, indicating that bearish momentum is still on silver, short term or further volatility.
Fundamentals positive factors:
- The South China Morning Post quoted a source as saying that China fired two missiles into the South China Sea on the morning of June 26, one of which was the DF-21D “carrier killer” anti-ship missile to send a clear warning to the US.
- CNBC quoted sources as saying that Republicans are preparing to unveil a new $500 billion anti-epidemic bill to lawmakers as soon as next week.
- The United States government imposed sanctions on 24 Chinese companies and several individuals for their alleged involvement in the reclamation and militarization of artificial islands in the South China Sea.
- U.S. consumer confidence fell to its lowest level in more than six years in August as households fretted about the job market and incomes.
Fundamentals negative factors:
- U.S. stocks surged on Wednesday, pushing the S&P 500 to a record closing high for a fourth straight session, as investors remained focused on broader momentum stocks that have outperformed since the outbreak of the coVID-19 pandemic.
- Holdings in the SPDR Gold Trust, the world’s largest Gold ETF, fell 3.51 tonnes, or 0.28 per cent, from its current position of 1248.87 tonnes.
- The US Food and Drug Administration has approved the emergency use of plasma in COVID-19 patients, amid reports that the Trump administration may expedite the approval of a vaccine candidate.
- China and the US made a phone call. On the morning of August 25, Liu He, member of the Political Bureau of the COMMUNIST Party of China (CPC) Central Committee, Vice Premier of the State Council and Chinese leader of the China-Us Comprehensive Economic Dialogue, spoke by telephone with US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin. The two sides held constructive dialogue on strengthening macroeconomic policy coordination and implementing the first phase of the economic and trade agreement between the two countries. The two sides agreed to create conditions and atmosphere to continue to push forward the implementation of the first phase of the China-Us economic and trade agreement.