Gold triumphs record $2,000 per ounce peak on U.S. stimulus bets
· Gold prices soared past the key $2,000 mark for the first time in history on Tuesday, as the ultra-low interest rate environment and hopes for more U.S. stimulus to safeguard the coronavirus-hit economy embellished the safe-haven metal’s appeal.
· Spot gold jumped as much as 1.6% to $2,009.13 an ounce, and was up 1.4% at $2,004.35. U.S. gold futures , which also surged to a record peak of $2,027.30, settled 1.7% higher at $2,021.
· “Safe-haven buying has propelled gold prices to breach $2,000 for the first time as the U.S. dollar tested lows last seen over two years ago, negative real rates fell to levels last seen in 2013 and expectations for further stimulus packages continue to build,” said Standard Chartered analyst Suki Cooper.
“Given how quickly prices have rallied, the risk of a temporary pullback has risen,” Cooper said, adding the balance of risks still remain skewed to the upside in light of the macro backdrop remaining “exceptionally favourable.”
· Talks between White House and Democratic leaders in the U.S. Congress were finally moving in the “right direction” as they tried to reach an agreement over a major coronavirus relief bill, a U.S. Senate’s top Democrat said.
· The confirmation that there has been development in negotiations with Republicans on new COVID-19 support has boosted gold back to recent highs, said Tai Wong, head of base and precious metals derivatives trading at BMO.
· Bullion has surged a stellar 32% so far this year, supported mainly by lower interest rates and widespread stimulus by global central banks to ease the economic blow from the pandemic.
· Prices can rally towards the $2,300 level by the year-end, according to Edward Moya, senior market analyst at broker OANDA.
· “The treasury market is strongly signalling that this lower interest rate environment is here to stay. In the last decade, treasuries always had the edge over gold but right now that’s not the case, we’re going to see investors’ primary focus be on gold.”
· Other precious metals also followed suit, with silver rallying as much as 7% to a one-week peak of $25.95 an ounce on upbeat factory data, and was last up 5.6% at $25.60.
· Platinum rose 1.4% to $928.78 and palladium rose 2.3% to $2,132.63.
· CORONAVIRUS UPDATES:
· White House seeks deal this week with congressional Democrats on coronavirus bill
White House negotiators on Tuesday vowed to work “around the clock” with congressional Democrats to try to reach a deal on coronavirus relief by the end of this week, as the pandemic takes a heavy toll on American life.
Following an afternoon meeting of the four main negotiators, Treasury Secretary Steven Mnuchin raised the possibility of a deal by week’s end, which could clear the way for votes in the Senate and House of Representatives.
White House, Democrats seek coronavirus aid deal by week’s end: Mnuchin
White House and Democratic leaders in the U.S. Congress are aiming to reach a deal on a new coronavirus aid package by the end of this week, having made progress on key components of a bill, Treasury Secretary Steven Mnuchin said on Tuesday.
Speaking to reporters following a negotiating session with House of Representatives Speaker Nancy Pelosi and Senate Democratic Leader Chuck Schumer, Mnuchin said headway was made on extending unemployment benefits and preventing housing evictions during the pandemic.
· The Fed is expected to make a major commitment to ramping up inflation soon
In the next few months, the Federal Reserve will be solidifying a policy outline that would commit it to low rates for years as it pursues an agenda of higher inflation and a return to the full employment picture that vanished as the coronavirus pandemic hit.
Recent statements from Fed officials and analysis from market veterans and economists point to a move to “average inflation” targeting in which inflation above the central bank’s usual 2% target would be tolerated and even desired.
To achieve that goal, officials would pledge not to raise interest rates until both the inflation and employment targets are hit. With inflation now closer to 1% and the jobless rate higher than it’s been since the Great Depression, the likelihood is that the Fed could need years to hit its targets.
· China's U.S. envoy says Beijing does not want further rise in tensions
Beijing does not want tensions with Washington to escalate further following tit-for-tat consulate closures over the past weeks, the Chinese ambassador to the United States said on Tuesday.
The world’s top two economies should work to cooperate instead of confronting each other, Ambassador Cui Tiankai said, striking a relatively conciliatory tone at the virtual Aspen Security forum.
“I don’t think a new Cold War would serve anybody’s interest,” said Cui, seen as a moderate voice among Beijing’s top diplomatic brass. “Why should we allow history to repeat ... when we are faced with so many new challenges?” he said, while rejecting U.S. allegations of Chinese spying in the Houston consulate shut down by Washington last month.
· China pursues economic self-reliance as external risks grow: advisers
China is looking to reduce its reliance on overseas markets and technology for its economic development, government advisers say, as U.S. hostility and a global pandemic increase external risks that could hamper longer-term progress.
· Trump’s bid for a piece of Microsoft –TIKTOK deal could spur legal action
The Committee on Foreign Investment in the United States (CFIUS), a U.S. government panel that reviews deals for potential national security risks, has given ByteDance until Sept. 15 to negotiate a sale of TikTok to Microsoft Corp (MSFT.O), amid concerns over the safety of personal data that the app handles under its Chinese parent.
While CFIUS has never before sought a cut from the proceeds of a divestiture it has ordered, the White House could argue that imposing a fee on Bytedance would deprive it of resources that would otherwise support China’s government on technology initiatives that could harm U.S. interests.
While a previous fifth amendment challenge to a CFIUS order had limited success, this would be the first time a challenge could be mounted against the U.S. government imposing a deal fee, the experts added.
· Rocket fired towards US Embassy in Baghdad
A Katyusa rocket was fired towards the Green Zone in Baghdad where the US embassy is located on Tuesday night, according to Iraqi media. A siren was sounded in the embassy to alert those inside to find shelter.
The Iraqi military found seven Katyusha rockets aimed at the Green Zone, according to Al Hadath.
Reference: Reuters, CNBC, The Jerusalem Post
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