Gold rises 1% on dollar weakness, economic uncertainty
· Gold gained 1% on Wednesday, rebounding from a sharp decline in the previous session, boosted by a weaker dollar and uncertainties surrounding the U.S. election and global economic recovery boosted the safe haven metal’s allure.
· Spot gold was up 0.7% to $1,903.20 per ounce by 1:46 p.m. EDT (1746 GMT). U.S. gold futures settled up 0.7% to $1,907.30.
· The dollar was down against major currencies, while the benchmark 10-year Treasury yield also fell. Bullion dipped as much as 1.9% on Tuesday after the greenback rallied on an impasse over U.S. stimulus.
· “The dollar index is down on the day, yields are lower which is supporting gold and we’re also seeing some technical buying probably because yesterday’s correction was a little overdone,” said Bart Melek, head of commodity strategies at TD Securities.
“We’re going to get a stimulus no matter who wins the elections - Democrats or Republicans ... the fact of the matter is the U.S. needs a stimulus package, although it looks doubtful that we’ll get one in any meaningful way before the elections,” Melek added.
· Gold, considered a hedge against inflation and currency debasement, has climbed 25% this year amid the unprecedented levels of global stimulus to ease the economic blow from the pandemic.
· Investors also kept an eye on the U.S. presidential campaign, with polls showing Democratic candidate Joe Biden leading the race, but many remained worried about the potential for a delayed election result.
· “The $1,900 an ounce level has been a battle ground for gold,” said Eli Tesfaye, senior market strategist at RJO Futures. “The market has tried to take it below that level several times but the bears have been overcome by demand from the uncertainty in the upcoming U.S. elections, stimulus and Brexit.”
· Elsewhere, silver rose 0.5% to $24.30 per ounce, platinum fell 0.7% to $859.30 and palladium gained 1.2% to $2,342.32.
· Mnuchin says passing COVID-19 relief before the election would be ‘difficult’ as negotiations continue
Treasury Secretary Steven Mnuchin said Wednesday that passing another COVID-19 relief package before the election would be “difficult.”
The Republican-controlled Senate is set to act on a roughly $500 billion relief proposal next week, an amount rejected by congressional Democrats as insufficient to tackle the COVID-19 pandemic. The last White House offer of about $1.8 trillion was also rejected by House Democrats, who have held fast to their $2.2 trillion proposal.
“There are money issues, but there’s also policy issues,” Mnuchin said, adding that the Trump administration supports “immediate help” through standalone bills for small-business loans and airline aid while negotiations over a larger package continue.
Both sides have deadlocked over issues such as the amount of relief for state and local governments or the amount of money to give in a federal unemployment benefit.
House Speaker Nancy Pelosi, D-Calif., and Mnuchin spoke on the phone for about an hour Wednesday morning, talks Pelosi spokesperson Drew Hammill called “productive.”
· U.S. Treasury chief urges IMF, World Bank to be prudent fighting pandemic
U.S. Treasury Secretary Steven Mnuchin on Wednesday urged the International Monetary Fund and World Bank to work judiciously within their existing resources to fight the coronavirus pandemic and urged G20countries to endorse a proposed debt restructuring framework.
· Fed Vice Chair Clarida says economy needs ‘perhaps another year’ to return to pre-pandemic level
The U.S. economy needs another year or maybe more until it gets back to its pre-pandemic levels of activity, Federal Reserve Vice Chairman Richard Clarida said Wednesday.
Clarida noted that policy moves by the Fed and Congress have helped stimulate activity like buying houses and cars and investing in software and equipment, all measure that help boost growth.
· Fed's Kaplan says disadvantaged Americans need help getting back to work
Women and minorities, who have been affected by pandemic-related job losses, will need help getting back to work as more economic activity shifts to sectors less dependant on face-to-face interaction, Dallas Federal Reserve President Robert Kaplan said on Wednesday.
· IMF says U.S. has room for more stimulus, would aid long-term growth
The United States has room to provide further fiscal support to its economy, which would have a positive impact on its long-term growth prospects, International Monetary Fund Fiscal Affairs Director Vitor Gaspar said on Wednesday.
· IMF sees debt soaring but stabilizing at 100% of GDP--if pandemic eases, growth resumes
Massive government spending to battle the coronavirus pandemic will push public debt to a record of nearly 100% of global economic output this year, but the run-up may be a one-off event if growth rebounds next year, the International Monetary Fund said on Wednesday.
The Fund said in its latest Fiscal Monitor that it expects government budget deficits to swell to 12.7% of GDP from 3.9% in 2020, a nearly 9 percentage point difference.
“What we see is a one off, jump up of debt in 2020, then stabilization after 2021, and even a slight downward trend in 2025,” IMF Fiscal Affairs Director Vitor Gaspar told Reuters in an interview.
· U.S. 2020 Election Focus:
- A record early turnout for the Nov. 3 U.S. election has seen more than 10 million Americans already cast ballots by mail or in person. Texans joined Georgians, forming long lines outside early voting sites as Americans rush to the polls to avoid Election Day crowds amid concerns about the coronavirus pandemic.
- Twitter suspends several accounts claiming to be owned by Black supporters of Trump and his re-election, saying they broke rules on platform manipulation.
- Republicans locked in tight races used U.S. Supreme Court nominee Amy Coney Barrett’s confirmation hearing to make re-election pitches on healthcare, policing and campaign fundraising as they fight to keep their seats and retain control of the Senate on Nov. 3.
GLOBAL PERSPECTIVE:
The strong ties between Trump and Indian Prime Minister Narendra Modi raised concerns a Biden administration would be tougher on India’s human rights record. But bilateral relations were at the bottom of the list for Indian Americans, who said the economy and healthcare are their top considerations.
INVESTOR VIEW:
Asian equities slipped as the White House and the U.S. House of Representatives remain gridlocked on a new coronavirus relief package. Some analysts say hope for a fresh round of stimulus is fading and it is not expected until after the Nov. 3 election.
BY THE NUMBERS:
Biden has an eight-point lead over Trump in Michigan and both are locked in a tight race in North Carolina, Reuters/Ipsos polling of battleground states shows.
· CORONAVIRUS UPDATE:
Total confirmed cases: More than 38,729,174
Total deaths: At least 1.096,320
US cases: At least 8,148,928 (+58,578), and deaths: 221,840 (+967)
· WHO warns Canada is facing a ‘second wave’ of coronavirus cases
· Healthy young people might not be able to get the coronavirus vaccine until 2022, WHO says
Healthy young people might not get the coronavirus vaccine until 2022 as public health officials focus on immunizing the elderly and other vulnerable groups first, top officials from the World Health Organization said Wednesday.
· Panicked Europe battens down against COVID second wave
European countries have begun to close schools and cancel surgeries, going well beyond curbs on social life, as overwhelmed authorities face their nightmare scenario of a COVID-19 resurgence right before the onset of winter.
European daily infections have been running at an average of almost 100,000 a day, forcing governments to introduce a range of tightening restrictions, each attempting to calibrate them in order to protect health without destroying livelihoods.
In Germany, politicians are debating whether to extend the Christmas-New Year break to reduce contagion among children spreading to the wider community, though critics say there is no evidence that schools have been infection hot spots.
· New virus containment measures would require more ECB stimulus, Holzmann says
The European Central Bank will need to provide fresh stimulus to the euro zone economy if countries take “more durable, extensive or strict containment measures” to fight the coronavirus pandemic, ECB policymaker Robert Holzmann said on Wednesday.
· EU and Britain to keep talking past Johnson's Brexit deadline
The European Union and Britain are set to prolong Brexit talks past a mid-October deadline to try bridge persistent gaps holding up a new agreement, according to sources and documents.
As the year-end deadline approaches to put in place a new trade agreement with Britain, EU leaders meeting on Thursday and Friday will tell their Brexit negotiator to step up talks to get a deal by Jan. 1, 2021, according to a draft summit decision seen by Reuters.
· Brexit talks at impasse on three key issues, EU diplomat says
Talks between the European Union and the United Kingdom to reach a deal on their future relationship are still snagged on the three key issues of fishing, level playing field and governance of their agreement, an EU official said on Wednesday.
· No EU summit on Brexit expected in November, EU official says
· UK should do more to help COVID jobless, tax rises can wait: OECD
· Europe should use WTO Boeing win to de-escalate EU-U.S. trade spat: German finmin
Europe must use its victory in its dispute with the United States over subsidies to planemaker Boeing BA.N as a leverage to push for de-escalation in a broader trade conflict with Washington, German Finance Minister Olaf Scholz said on Wednesday.
The European Union on Tuesday won the right to impose tariffs on $4 billion of U.S. goods in retaliation against subsidies for planemaker Boeing.
· China's third quarter GDP growth expected to improve: PBOC official
Authorities should allow the macro-leverage ratio to rise temporarily due to efforts to boost credit support to the economy hit by the pandemic, Ruan said.
· China’s Xi uses key speech to promote integration of Hong Kong
Amid uncertainty about Hong Kong’s future and China’s international relations, President Xi Jinping maintained Wednesday that the country remains intent on doing business with the rest of the world, in its own way.
In a speech that lasted nearly one hour, Xi made broad statements reiterating China’s commitment to improving the business environment and opening further to foreign enterprises, while indicating how Hong Kong might be integrated more into the mainland.
· Chinese President Xi Jinping tells troops to focus on 'preparing for war'
Chinese President Xi Jinping has called on troops to "put all (their) minds and energy on preparing for war" in a visit to a military base in the southern province of Guangdong on Tuesday, according to state news agency Xinhua.
During an inspection of the People's Liberation Army Marine Corps in Chaozhou City, Xinhua said Xi told the soldiers to "maintain a state of high alert" and called on them to be "absolutely loyal, absolutely pure, and absolutely reliable."
The main purpose of Xi's visit to Guangdong was to deliver a speech Wednesday commemorating the 40th anniversary of the Shenzhen Special Economic Zone, which was established in 1980 to attract foreign capital and played a vital role in helping China's economy become the second-largest in the world.
But the military visit comes as tensions between China and the United States remain at their highest point in decades, with disagreements over Taiwan and the coronavirus pandemic creating sharp divisions between Washington and Beijing.
The White House notified US Congress Monday that it was planning to move ahead with the sale of three advanced weapon systems to Taiwan, according to a congressional aide, including the advanced High Mobility Artillery Rocket System (HIMARS).
· Thai police clear protest as decree bans gatherings
Thai riot police cleared thousands of protesters from outside the prime minister’s office early on Thursday as an emergency decree banned large gatherings and the publication of sensitive news in the face of escalating protests.
Reference: Reuters, CNBC, USA Today, CNN
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