· Gold Price Analysis: XAU/USD fades bounce off $1,858, focus on Brexit, US President Trump
Gold eases from the day’s top to $1,880 during the initial Asian session on Thursday. The yellow metal managed to benefit from the US dollar weakness and hopes of a Brexit deal the previous day while posting the first positive daily closing in the last four. However, the recently cautious sentiment over the Brexit deal, US President Donald Trump’s warning to Iran and the coronavirus (COVID-19) challenge the bullion buyers.
Brexit in limbo despite all optimistic headlines...
The UK’s readiness to ease fishing terms offered a great push to the Brexit deal negotiations. While the Cabinet discusses progress on the talks, chatters from reporters of The Guardian and Sky News, not to forget the Daily Express, hints that the deal is imminent. Though, nothing official has crossed the wires off-late.
On the other hand, US President Donald Trump cites Iran’s attack in Baghdad to warn the Arab nation of holding it responsible if one American is killed. The Republican Party member also turned down the defense bill while marking non-friendly relations with China and Russia. Additionally, the White House leader obstructed a $900 covid aid package and $1.4 trillion government spending bill while urging Congress to add more funds.
Elsewhere, CNBC quotes the US Federal Health Officials while saying, “Coronavirus vaccine distribution has been slower than U.S. officials hoped.” Also propelling the virus woes are chatters over a widespread activity restriction wave in the UK.
Against this backdrop, S&P 500 Futures look for a clear direction below 3,700 after Wall Street benchmarks closed mixed for Wednesday.
Moving on, Brexit headlines will be the key for immediate market moves while news concerning US stimulus, China and virus may also try to entertain traders.
Technical analysis
Not only the failures to cross 100-day SMA, at $1,899 now, but a short-term rising wedge formation on the daily chart also keeps the gold sellers hopeful. Though, a clear downside break of $1,864 becomes necessary to strengthen the bearish bias.
GOLD TECHNICAL ANALYSIS
Gold prices continue adhering to the short-term rising trendline from late November. At the same time, XAU/USD is struggling to make further upside progress beyond the 50-day SMA as prices hover above the 1848 – 1863 inflection zone. A push above ‘potential resistance’ on the daily chart below could open the door to a reversal of the dominant downtrend since August.
· Stocks and sterling pin hopes on Brexit, regulator probe stings Alibaba
Asian shares and the British pound rose on Thursday ahead of the Christmas break, as Britain and the European Union closed in on a free-trade deal and investors placed bets on global economic recovery prospects.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.45%. Australian stocks ended 0.33% higher, while Tokyo shares rose 0.45%.
Chinese stocks fell 0.28%.
MSCI’s gauge of global stocks was up 0.12%, but moves were subdued in thin holiday trading.
Alibaba Group Holding Ltd shares slumped 8.13%, its biggest daily drop in six weeks, after China’s market regulator said it will investigate the tech giant for suspected monopolistic behaviour.
U.S. stock futures edged up by 0.16%.
FTSE futures were up 0.56%. Euro Stoxx 50 futures were up 1.15%, while German DAX futures rose 1.28%, pointing to a bright start to the European session.
Investors cheered news that Britain and the European Union were on the cusp of striking a narrow trade deal on Thursday that would help them avoid a turbulent economic rupture on New Year’s Day.
Hopes for more fiscal spending and expectations that coronavirus vaccines will become more available next year also supported global equities.
The potential for a Brexit deal boosted sterling, which rose 0.47% to $1.3558. The pound edged up to 90.05 pence per euro.
The pound also drew support after France lifted its ban on freight coming from Britain, which it had enacted in response to a more contagious coronavirus variant in Britain.
Dollar on back foot amid hopes Brexit deal imminent
The dollar index was at 90.233 following Wednesday’s 0.3% slide. The euro strengthened 0.1% to $1.22030, adding to a 0.2% gain overnight.
· U.S. CDC urges public to avoid travel during Christmas to curb COVID-19 infections
The U.S. Centers for Disease Control and Prevention (CDC) has urged the public to avoid travel and stay at home during Christmas holiday, to curb the further spread of the COVID-19 virus.
"Travel may increase your chance of spreading and getting COVID-19. CDC continues to recommend postponing travel and staying home, as this is the best way to protect yourself and others this year," the CDC said in its latest advisory.
The safest way to celebrate winter holidays is staying at home with the people who live with you, it added.
· On cusp of Brexit trade deal, EU and UK hash out final details
Sources in London and Brussels said a deal was close as British Prime Minister Boris Johnson held a late-night conference call with his senior ministers, and negotiators in Brussels pored over reams of legal trade texts.
There was no official confirmation of a deal but Johnson was expected to hold a news conference on Christmas Eve - just seven days before the UK turns its back on the EU’s single market and customs union at 2300 GMT on Dec. 31.
News that a deal was imminent, first reported by Reuters, triggered a surge in the pound while bond yields rose across the world.
· Sit, stay, detect COVID! Chile dogs report for duty at Santiago airport
The task of sniffing out passengers infected with COVID-19 at Chile's Santiago international airport is going to the dogs.
A team of Golden Retrievers and Labradors sit when they smell the virus and get a treat. The canines sport green "biodetector" jackets with a red cross.
Passengers at an airport health checkpoint wipe their necks and wrists with gauze pads that are then put in glass containers and sent to the dogs to see if they detect COVID-19.
· · 2 charts show China’s shortfall in buying U.S. goods under the ‘phase one’ trade deal
Nearly one year after the U.S. and China signed the “phase one” trade agreement, Beijing is still far from meeting its committed purchases of American goods, data compiled by the Peterson Institute for International Economics showed.
The “phase one” trade deal signed in January paused a tariff fight between the world’s top two economies that started in 2018. The centerpiece of the agreement is China’s commitment to buy at least $200 billion more in U.S. goods and services over two years — in 2020 and 2021 — on top of its purchases in 2017.
Several experts had said it was not realistic for China to buy that much more in additional U.S. goods. Meeting that obligation was made even more difficult as the Covid-19 pandemic caused Chinese import demand to plunge.
Referencing the latest U.S. trade data, PIIE said on Wednesday that between January and November this year China bought $82 billion of U.S. goods — just more than half of the targeted $159 billion for all of 2020.
Breaking down by the types of goods, the data showed that China’s purchases of all product categories in the 11 months were far short of its agreed full-year commitment, said the Washington D.C.-based think tank.
China has made the least progress in buying U.S. energy products, while it is the closest to meeting the targeted amount of agricultural goods, the data showed.
President-elect Joe Biden, who will take office next month, has said he will not immediately remove tariffs imposed by the Trump administration on China. He first wants to conduct a full review of the “phase one” trade deal, and consult with U.S. allies to develop a “coherent strategy” on China.
· Japan may intervene to arrest yen rise but only once, says former currency tsar
Japan may intervene in the foreign exchange market to prevent the yen from rising above 100 to the dollar, but just once given the difficulty of keeping currency rates pegged at a set level, former top currency diplomat Hiroshi Watanabe said on Thursday.
Many analysts expect the yen, which hovered around 103.50 to the dollar on Thursday, to rise past the psychologically crucial 100 mark in coming months as expectations of huge U.S. fiscal spending weigh on the greenback.
· BOJ's Kuroda to seek ways to make stimulus 'nimble' in review
Bank of Japan Governor Haruhiko Kuroda said the central bank’s planned policy examination will seek to make its stimulus programme “nimble” to counter future shocks, such as the coronavirus crisis that has deepened the country’s recession.
Markets are looking for clues on what could come out of the BOJ’s plan, unveiled last week, to examine more effective ways to achieve its elusive 2% inflation target.
· South Korea to import J&J, Pfizer COVID-19 vaccines for 16 million people
South Korea has signed deals with Pfizer Inc and Johnson & Johnson’s Janssen to import coronavirus vaccines to cover up to 16 million people, as it grapples with the third wave of the pandemic, the prime minister said on Thursday.
· Taiwan cancels tourism event after COVID-19 case
Taiwan's tourism department on Wednesday cancelled an annual New Year celebration at the northeastern tip of the island, after a report of the first locally transmitted COVID-19 case since April 12.
The event, to watch the sun rise on the first day of the year, was due to take place in the coastal town of Fulong.
Other New Year's Eve celebrations, including fireworks in Taipei, are still taking place, though with masks mandated for attendees.
Taiwan has so far reported a total of 777 cases - mostly imported - and seven deaths. Around 130 people remain in hospital for treatment.
· Oil climbs as U.S. inventory draw, Brexit deal hopes boost risk appetite
Oil climbed for a second day on Thursday in light holiday trade as a drawdown in U.S. stockpiles of crude and gasoline raised demand hopes, while hints of an imminent Brexit deal raised investors’ risk appetite.
Brent crude futures rose 38 cents, or 0.7%, to $51.58 a barrel by 0530 GMT, while U.S. West Texas Intermediate (WTI) crude futures increased 31 cents, or 0.6%, to $48.43.
Both contracts gained more than 2% on Wednesday.
CRUDE OIL TECHNICAL ANALYSIS
WTI crude oil prices bounced off the short-term 20-day Simple Moving Average, following the bullish implications of a ‘Golden Cross’ formed back in late November. Moreover, prices may aim for the 49.42 inflection point which was established back in early February. A climb above resistance would subsequently expose the February high at 54.45
Reference: DailyFX, FXstreet, Reuters, CNBC
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