Fortune Investment Network, March 23 - In Asian markets on Tuesday (March 23), the U.S. dollar index strengthened slightly and is now at around 91.85; spot gold fell rapidly in the short-term, and the price of gold was approaching the $1,730 per ounce mark. On Tuesday, local time, Fed Chairman Powell will testify in Congress, and his remarks are expected to affect the trend of assets such as the U.S. dollar and gold. Regarding the situation between China and the United States, the White House spokesperson recently stated that China and the United States had a difficult and direct dialogue last week, but at the same time they also talked about the part that the two sides can cooperate. This news is expected to help ease the tension between China and the United States, and thus in certain circumstances. To a certain extent weaken the safe-haven buying of gold.
Gold prices weakened on Monday. The fall in the US dollar and the fall in U.S. bond yields did not give gold prices a chance to breathe, while the rise in the US stock market weakened the attractiveness of gold prices. Spot gold closed at $1,738.89 per ounce, down $6.19 or 0.35%. In Asian markets on Tuesday, the price of gold plummeted in a short-term, with the lowest hitting $1,730.86 per ounce.
The well-known financial media Marketwatch reported that although both U.S. Treasury yields and the U.S. dollar fell moderately, which is usually beneficial to the rise of gold prices, the price of gold still started to fall this week.
CMC Markets UK analyst David Madden said: "The price of gold should have gone higher, but it is not the case-if normal correlations (such as a weaker U.S. dollar) fail to provide support, this does indicate that the market is weak." He added that if the U.S. dollar and As yields rise, gold prices may fall further.
As investors bet on economic recovery, the U.S. Treasury yield fell to 1.6981% on Monday, but it was still close to a one-year high. After the Fed said last week that the U.S. economy is on a strong growth track, U.S. bond yields rose.
Rising US stocks also put pressure on gold. As U.S. Treasury yields fell, the three major U.S. stock indexes rose on Monday. The Dow closed up 103.17 points, or 0.32%, to 32,731.14 points; the S&P 500 index closed up 27.32 points, or 0.70%, to 3,940.42 points, ending its two consecutive trading days of decline; the Nasdaq closed up 162.31 points, an increase 1.23%, reported 13377.54 points.
Analysts believe that the plunge in the Turkish lira has also led to a fall in the price of gold, because the currency depreciation may affect the demand of Turkey, the main gold buyer. The World Gold Council (WGC) reported in January that Turkey is the largest gold buyer in 2020, and its official gold reserves have increased by 134.5 metric tons.
In the early morning of March 20, local time, the Turkish government issued an official announcement signed by President Tayyip Erdogan, announcing the appointment of Kafcioglu as the new governor of the Turkish Central Bank and the dismissal of former governor Abbar. At this time, it has just been 4 months since Abar took office. Abar’s dismissal is believed to be related to the Turkish Central Bank’s interest rate hike on March 18. On the same day, the Central Bank of Turkey announced that it would raise the benchmark interest rate from 17% to 19%.
Analysts pointed out that Turkish President Erdogan unexpectedly removed the governor of the hawkish central bank last Saturday and appointed a critic of high interest rates as the new governor. The decision was shocking. Concerns that Turkey’s move may threaten other financial markets support the US dollar, making gold more expensive for holders of non-US dollar currencies. At the same time, the country may implement capital controls to limit capital inflows, and domestic investors may find it more difficult to obtain US dollars, which makes it difficult to buy gold.
Powell testifies against Congress
Investors will focus on the congressional testimony of Fed Chairman Powell on this trading day. His remarks are expected to affect the trend of US dollar and U.S. bond yields, which in turn will guide the trend of gold prices.
At 00:00 Hong Kong time on Wednesday, Fed Chairman Powell and U.S. Treasury Secretary Yellen will testify before the House of Representatives Financial Services Committee.
Although the Fed is expected to remain extremely patient as the US economy recovers, the gold market still needs to deal with rising bond yields. Powell said a few days ago that he is not worried about the recent bond market sell-off, which once pushed yields to a 13-month high of more than 1.7%.
The Fed sharply raised its expectations for economic growth last Wednesday, but at the same time said that although the economic outlook has improved and inflation has risen this year, it is not expected to raise interest rates until 2023.
Powell last Wednesday reiterated his commitment to maintain interest rates close to zero in order to maintain the normal track of economic recovery, even if the inflation rate this year exceeds the 2% target.
For many investors, the rise in bond yields is the biggest challenge facing the gold market, and bond yields are also supporting the U.S. dollar.
Bob Haberkorn, senior market strategist at RJO Futures, said: "Powell's remarks on interest rates are very supportive of gold, but on the other hand, the fact that 10-year yields continue to rise limits any upside for gold."
Rona O'Connell, head of market analysis for Europe, the Middle East and Asia at Stoneex, said: "The market continues to pay attention to the yields of U.S. Treasury bonds, especially the U.S. 10-year Treasury bond yields. As expectations for a sustainable economic recovery continue to increase, corporate confidence continues to grow. Strengthening, U.S. Treasury bond yields have been rising."
Credit Suisse warned investors in a research report that gold prices are still vulnerable to rising U.S. Treasury yields and a rebound in the dollar.
In addition to Powell, a number of Fed officials will deliver speeches this trading day.
At 21:00 Hong Kong time on Tuesday, St. Louis Fed President Brad will deliver a speech on the US economy and monetary policy. At 22:10 Hong Kong time on Tuesday, Atlanta Fed President Bostic will deliver a speech. At 23:00 Hong Kong time on Tuesday, Richmond Fed President Barkin will deliver a speech.
At 02:45 Hong Kong time on Wednesday, New York Fed President Williams will deliver a speech. At 03:45 Hong Kong time on Wednesday, Federal Reserve Governor Brainard will deliver a speech. At 04:20 Hong Kong time on Wednesday, St. Louis Fed President Brad will participate in the discussion on "the devaluation of the U.S. dollar."
The White House releases the latest news of China-US talks
On Monday (March 22) local time, at a White House press conference, White House Press Secretary Jen Psaki stated that the China-US Alaska talks last week were a substantive meeting, and the United States has already anticipated the meeting with China. Difficult and direct dialogues are conducted on a wide range of issues, and China and the United States also talked about the areas where the two sides can cooperate in the talks.
From March 18th to 19th local time, the China-US high-level strategic dialogue was held in Anchorage, Alaska. After the talks, the two sides pointed out that they had differences on many controversial issues, but promised to cooperate in areas such as climate change, Iran, North Korea, and Afghanistan. Yang Jiechi, a senior Chinese diplomat, called the talks "direct, frank and constructive." U.S. Secretary of State Blincoln called the meeting "a very frank dialogue with a broad agenda," including economics, trade, and technology, but he also said that his team has closed on the issue of "fundamental differences" between the two countries. The “defensive response” includes Xinjiang, Hong Kong, Tibet, Taiwan and cyberspace.
In response to a reporter’s question, Psaki said: “We expected to have a difficult and direct dialogue with China on a wide range of issues, and this is true. I know those publicly dramatic scenes or dramatic bridges. Duan has received a lot of attention, but I can guarantee that after talking with our national security team, it was a substantive meeting."
Psaki said that the China-US high-level strategic dialogue involved a series of issues, including Hong Kong, Taiwan and human rights issues, as well as economic and intellectual property issues that the United States is concerned about. She said: “Of course we also talked about the parts that can be cooperated between the two sides. We are evaluating the collected information to see where we stand now.” Psaki also said that the United States will continue to cooperate with allies, which will also be in line with the American people. The issue of interest continues to cooperate with China.
She said: "I expect President Biden to discuss with the National Security Team, National Security Advisor Sullivan, and Secretary of State Blincol, while discussing with allies and partners to see what the next step is. Of course we will be in a place that is beneficial to the American people. Continue to cooperate with China.” Psaki added that the Anchorage meeting is a separate meeting for the next step, and the United States has not yet decided what to do next.
On March 22, Chinese Foreign Ministry Spokesperson Hua Chunying presided over a regular press conference. A reporter asked that the China-US high-level strategic dialogue ended last weekend. How does China evaluate the outcome of the dialogue? Does it think that the dialogue has achieved the expected goals? Hua Chunying said that at the invitation of the United States, China went to Anchorage to hold a China-US high-level strategic dialogue with the United States. It is an important measure to implement the consensus of the two heads of state on the New Year’s Eve call. News release. After the dialogue, Director Yang Jiechi and State Councilor Wang Yi accepted an interview from the media and introduced the situation of the dialogue.
Hua Chunying said that during this dialogue, China and the United States conducted candid, in-depth, long-term and constructive communications on their domestic and foreign policies, Sino-US relations, and major international and regional issues of common concern. The dialogue was timely and helpful. , Deepen mutual understanding. She said: "I hope that the United States can also meet each other halfway, especially to respect and take care of each other's core interests and major concerns. On this basis, the door for China to continue dialogue between China and the United States is always open."
In a statement issued after the meeting, Beijing stated that the two countries will establish a joint climate change working group. Beijing also stated that they discussed the arrangements for vaccinations against the new crown virus for diplomats and consulates of the two countries, and how to promote exchanges between the embassy and other groups, including the media. China said that travel and visa policies are also under discussion, which increases the possibility that restrictions may be loosened.
After the meeting, US Secretary of State Blincoln stated that the two governments "fundamentally differ" on issues such as Hong Kong and cyber attacks, but there are overlapping interests on issues such as Iran, North Korea, Afghanistan, and climate change. Although the talks did not achieve any breakthroughs as generally expected, Brinken said that the United States achieved the two goals of holding this meeting.
Brinken said: "First, we want to tell them our serious concerns about the series of actions China has taken and shown, and our allies and partners have the same concerns. We have done this. We also want to make it clear. Our own policies, priorities, and worldview. We did this too."
The US National Security Adviser Sullivan said after the meeting that the US delegation had previously expected the two sides to engage in difficult direct dialogue on a wide range of issues, and this is also the case. Based on the situation of this meeting, the US will decide the next step after consulting with allies and partners. Sullivan said: "We have the opportunity to clarify our priorities and intentions and listen to China's priorities and intentions. We come with a clear understanding and leave with a clear understanding. We will return to Washington and continue to evaluate our current And further consultations with allies."
