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Original title: The US House of Representatives passed the $ 2.2 trillion aid bill before the election. Gold priceWill it rise to $ 2,075 by the end of the year?
FX168 Financial News (Hong Kong) On Friday (October 2) in the Asian market in early trading, spot gold continued to decline and is now at around $ 1,900 an ounce. On the previous trading day, the price of gold fluctuated higher as a whole, breaking the barriers of 1900 and 1910 successively during the day, reaching a maximum of US $ 1911.82 per ounce, setting a new high at more than two weeks, increasing by nearly US $ 25 from the daily low and finally closing 1.05% at US $ 1,905.13 per ounce.
(5 Minute Gold Spot Chart, Source: FX168)
At 8:30 p.m. Beijing time on Friday, the US Department of Labor will announce seasonally adjusted changes in the non-farm employment population and unemployment rate in the United States in September. The current market expects the number of non-farm jobs in the United States to increase by 850,000 in September, which is less than the increase in August (that month an increase of 1.37 million). The October non-farm report will be released on November 6. In other words, this is the last non-farm report before the US election and the degree of importance is evident.
Like the last nonfarm employment report released before the election, it is conceivable that the two presidential candidates would make full use of this latest employment report to express their views on the American economy. The victory of different candidates will affect future tax expenditures and tax policies in the United States, as well as market trends for years to come. Currently, Biden is ahead of Trump in national polls, but in the undecided states that will determine the outcome of the election, there is not much difference in the polls between the two sides.
Furthermore, looking back at four years ago, incumbent President Trump said during his campaign that he would become “the president who created the greatest job opportunities” and promised to create 25 million job goals in the next ten years. A vision was brutally beaten. In March of this year, the worldwide outbreak of the new corona epidemic plunged the United States into its worst recession since the 1940s. In August, the United States lost 4.7 million net jobs and the number of unemployed exceeds 13 million. Even if you go back to the time before the outbreak, Trump’s job creation rate can hardly keep up with former President Obama’s second term.
You can see that a beautiful non-farm report is very important to Trump, because it will give Trump new ammunition for the decisive election, allowing him to affirm that the American economy continues to recover under his leadership. . But if nonfarm data can’t provide a satisfactory answer, there may be only two ways out waiting for Trump. One is to let non-farm data take on the bad data, and the other is to pressure Congress to pass a new round of stimulus bills to cover non-farm data. Adverse effects.
Regarding the new round of stimulus bills, the US House of Representatives passed the $ 2.2 trillion Democrats aid bill with 214 votes to 207 votes.The majority of Republicans voted against the bill. Yet as members of the highly competitive electorate are becoming more cautious about the current stalemate on the aid issue, 18 Democrats still voted against.
It is worth noting that this bill is likely to fail and become law in the Republican-controlled Senate. Senate Majority Leader Mitch McConnell has opposed this legislation because the Republican Party opposes spending billions of dollars on the federal government’s response to the epidemic.
Before the vote, Pelosi, Speaker of the House of Representatives, and Secretary of the Treasury Mnuchin had a conversation. During the conversation, although they did not reach an aid agreement, they agreed to continue the negotiations. They failed to bridge their differences on a variety of issues, including how much assistance was provided to state and local governments, and whether to establish liability guarantees for businesses and schools.
Earlier in the day, Pelosi downplayed the possibility that this week’s talks with Mnuchin provided the last and best chance to pass more relief ahead of the Nov.3 election. But it’s unclear what factors will prompt the two sides to make concessions, because Democrats are calling for a comprehensive plan to stimulate the economy and the medical system, while Republicans are concerned about spending too much money on the response plan.
In terms of geopolitics, Russian media reported on Thursday that a Russian scientist was detained in Siberia for allegedly transferring technology to China.According to the MBKh Media outlet, a 64-year-old scientist from Tomsk, Siberia, Alexander Lukanin, was detained on Tuesday after returning from China, who had previously worked at a local university. Under Russian law, the illegal transfer of technology to foreign countries can result in up to three years in prison. Interfax cited sources who said Lukanin was detained on suspicion of transferring technology to China, but was not charged with transferring state secrets, otherwise he could face a harsher sentence.
In recent years, many Russian scientists have been arrested and charged with treason and other crimes on suspicion of providing sensitive material to foreigners, including Chinese citizens. In February this year, Valery Mitko, director of the Arctic Academy of Sciences in St. Petersburg, was charged with leaking state secrets to China and subsequently charged with treason. Like Lukanin, Mitko also went to work at a university in China. Despite the doubts of some nationalist politicians, Russia is paying increasing attention to strengthening relations with China, especially after Russia annexed Crimea from Ukraine in 2014, which led to the breakdown of relations with the West.
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1. Sriram Iyer, senior research analyst at Reliance Securities, said that the rise in gold prices on Thursday was due to investors turning their attention to stimulating trading and the employment report on Friday.
2. Kotak Securities analyst Madhavi Mehta said the US dollar rose sharply last week due to the safe haven purchase, but fell this week as the focus shifted to the US economy, Congress and the government increased their efforts to negotiate a stimulus package and the first session of the Presidential Debate. Unless the United States makes a decision on a stimulus plan, the US dollar may remain under pressure to support gold and other commodities.
3. USA Michael Matousek, Chief Trader at Global Investors, said: “The silver lining about gold is that it increases uncertainty and more people want to have gold. Also, some policies are likely to continue, such as low interest rates. global rates and negative interest rates “.
4. Capital Economics assistant commodities economist Samuel Burman said in the report that they now expect the price of gold to reach US $ 2,000 / oz by the end of this year and US $ 2,100 / oz by the end of 2021 The new year-end goal is higher than the previous estimate of $ 1,900 per ounce. Burman said: “We believe that as the real yield falls slightly, the price of gold will continue to rise until the end of 2021.”
5. Bridgewater Associates LP, a hedge fund run by Ray Dalio, said in a September report that gold is not too expensive and it is not too late to buy it. The report entitled “Some Perspectives on Gold in the New Paradigm” stated that “policy makers around the world continue to face pressure to print money and spend, zero interest rates and structural shifts in positions of world power. In conflict situations, gold plays a unique role in protecting investment portfolios. It is advisable to hold something that the central bank cannot create anymore. “The key point of the hedge fund is that the price of gold this year has risen to $ 2,075, which is actually “quite modest” compared to past trends during reinflation.
Revision: TIER
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