A weaker day for stocks is brewing on Tuesday, as optimism about the US stimulus progress.
The asset that stole the show on Monday, of course, was GCQ20 gold,
which rose to $ 1,931 an ounce, the highest settlement in history. That prompted the crowd to expect $ 2,000 an ounce soon, and brings us to our call of the day from Goldman Sachs, which has abandoned its own forecast of $ 2,000 and says we’ll see $ 2,300 an ounce in the next 12 months.
The bank also raised its silver outlook to $ 30 from $ 22 an ounce.
Driven by “a possible shift in the US Federal Reserve. Towards an inflation bias in a context of mounting geopolitical tensions, high US internal political and social uncertainty. And a growing second wave of COVID-19 related infections “The rise in gold to new highs recently has had earnings outperforming real rates and other alternatives to the dollar,” said a team of analysts led by Jeffrey Currie.
“Combined with a record level of debt accumulation by the US government, real concerns began to emerge about the longevity of the US dollar as a reserve currency,” the team said.
One point made by Currie and the team is that hedges against inflation, like commodities and stocks, are likely to be much cheaper today, than perhaps in the future when inflation could start to appear. The current downgrade, which reduces the value of currencies, and the accumulation of debt “sows the seeds for future inflationary risks even though inflationary risks remain low today.”
Gold rose about 7% in the past month, against a 3.7% drop for the ICE US Dollar Index,
That said, gold appears to have halted that race on Tuesday, while the dollar has recovered.
Commerzbank analysts warn that record gold prices will weigh on significant physical demand for some time, especially from Asia, with China reporting a 38% drop in consumption in the first half this year. “Much will therefore depend on whether investors in the West continue to be willing to buy large quantities of gold even at current prices,” analyst Carsten Fritsch said.
However, Goldman Currie is not as concerned as he said emerging market currencies are beginning to see less pressure and growth is beginning to search the region. He sees that those buyers will be ready to step in when prices stabilize and buyers in the developed market run out of gas.
The market
Dow YM00,
S&P ES00,
and Nasdaq NQ00,
futures are falling, with European stocks SXXP,
also falling, while Asian stocks advanced.
The graphic
Real-time job statistics from Arizona State University and Virginia Commonwealth University (thanks to @johnauthors) show that pandemic unemployment has affected those with no college degrees far more than those with:
Take a look at more of that data here.
The buzz
The earnings news weighs on the shares of conglomerate 3M MMM,
and raising those of the pharmaceutical group Pifzer PFE,
while fast food giant McDonald’s MCD,
it’s down in your results. Biotech Amgen AMGN,
Visa V credit card company,
Starbucks SBUX coffee chain,
and the AMD AMD chipset,
they come after closing.
Outside of the Fed meeting, the Case-Shiller National Home Price Index and consumer confidence are ahead.
Republicans unveiled their latest COVID-19 stimulus package on Monday, but there will be a lot of trade before an agreement with Democrats is reached.
Data continues to show that cases in the United States may be beginning to stabilize in some of the worst affected southern and southwestern states. But parts of Europe, such as Spain and Belgium, and Asia are seeing cases start to rise again.
The tweet
Random readings
The former Malaysian leader was found guilty of looting 1MDB from the state investment fund.
Costco: Where America’s Loved Party Cakes Die.
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