Happiness Investment Network, March 30 - In Asian markets on Tuesday (March 30), the U.S. dollar index remained strong and is now at around 92.95; spot gold fell sharply in the short term, and the price of gold just fell below $1,705 per ounce. The latest news comes from the US fiscal stimulus. According to US media reports, US President Biden will announce the infrastructure plan on Wednesday local time. It is estimated that the scale will reach US$4 trillion, which is higher than the US$3 trillion previously reported by the media. The news aggravated the selling in the bond market, and U.S. Treasury yields rose further, which suppressed the price of gold.
The price of gold fell by more than 1% on Monday to a low in more than two weeks, as a strong US dollar and rising U.S. Treasury yields weakened the attractiveness of safe-haven metals, and bets on the rapid recovery of the US economy also put pressure on gold prices. Spot gold closed at US$1712.20 per ounce, down US$20.32 or 1.17%. Affected by the further increase in U.S. bond yields, spot gold fell rapidly in the Asian market on Tuesday, hitting a minimum of $1704.45 per ounce.
The well-known financial website Economies.com wrote an article that the price of gold fell sharply on Monday, falling below $1720.00 per ounce, which activated the bearish scenario. Gold prices are expected to fall further in the next few trading days, with short targets at $1700.00/ounce and $1692.00/ounce. Economies.com added that what needs to be considered is that the condition for the continued decline of gold is that the price of gold remains below $1720.00 per ounce.
Kitco.com senior analyst Jim Wyckoff said that the strengthening of the U.S. dollar and rising U.S. Treasury yields are unfavorable factors for the metal market. Gold and silver are also under technical selling pressure from short-term traders on the still bearish recent charts. Wyckoff added that the rapid recovery of the U.S. economy, coupled with the increase in the number of vaccines, and Biden’s statement to be issued on Wednesday, will be detrimental to gold prices in the short term.
The US dollar index rose 0.23% on Monday to close at 92.93, hitting an intraday high of 92.97. In the Asian market on Tuesday, the US dollar index remained near 92.95. The dollar index remained strong relative to other currencies, weakening the attractiveness of gold to investors holding other currencies.
Lukman Otunuga, senior research analyst at FXTM, said: "The encouraging developments in vaccines in the U.S. have ignited hopes for a faster recovery in the U.S. economy, thereby boosting appetite for the U.S. dollar. If the U.S. dollar continues its rally in the coming week, this may be possible. Will drag down the price of gold.
Adam Button, director of foreign exchange strategy at Forexlive.com, said he is also concerned about the elasticity of the dollar. He said: "I don't think it is time to re-enter gold. The US dollar is showing many positive signs, which may be a major resistance."
U.S. Treasury bond yields rose on Monday, and 10-year Treasury bond yields exceeded 1.7% on Monday. In Asian markets on Tuesday, the benchmark 10-year US Treasury bond yield further climbed to 1.726%. Rising U.S. bond yields will put pressure on gold. Some investors predict that the 10-year U.S. Treasury yield may soon reach the high of 1.75% recorded two weeks ago.
U.S. President Biden announced that it will expand the scope of vaccination in the U.S. in the next three weeks, expanding the range of people who can be vaccinated from those at high risk of infection to include 90% of American adults, and doubling the number of vaccination places provided. The new crown vaccination helps to contain the epidemic and promote the economic recovery as soon as possible, which is not conducive to the safe-haven demand for gold.
Analysts pointed out that, in addition to the progress of vaccination in the United States, the market expects Biden to announce a large-scale infrastructure spending plan in Pittsburgh, Pennsylvania on Wednesday, which has also intensified the bond market sell-off and promoted higher U.S. bond yields.
Higher yields also challenge gold's status as an inflation hedge, because it means that the opportunity cost of holding non-yielding gold is higher.
The Credit Suisse analyst team stated in a report that due to the expectation that the U.S. real yield and the U.S. dollar will strengthen further, the price of gold will remain down in the second quarter and may fall below $1682/71. Then the support level will be 1620/ 15 dollars, the final goal is 1564/61 dollars.
Blue line futures chief market strategist Phillip Streble said that he believes the price of gold may fall to $1,700 per ounce.
Biden may propose a US$4 trillion infrastructure plan that exceeds the previously reported US$3 trillion
The well-known financial website Business Insider reported on Tuesday (March 30) that US President Joe Biden is expected to announce his large-scale infrastructure plan on Wednesday local time, but it may bring surprises.
According to the "Washington Post" report, the scale of the plan was initially thought to be US$3 trillion, but it may now reach US$4 trillion, including a tax increase of US$3.5 trillion.
Last week, the "New York Times" first reported the details of the upcoming infrastructure proposal. In the report, sources familiar with the plan stated that its cost could be as high as $3 trillion. The plan has been confirmed to Business Insider. According to documents obtained by the New York Times, the
The plan will be divided into two legislative parts: one will focus on rebuilding infrastructure such as roads and bridges, and the other will focus on the "care economy", which will fund projects such as universal preschool education and free community colleges.
But three people familiar with the matter told the Washington Post on Monday that the White House is expected to promote up to $4 trillion in infrastructure spending, including up to $3.5 trillion in tax increases. According to sources, government officials worry that the huge gap between expenditure and income will widen the deficit, which may trigger a surge in interest rates, and tax increases will help alleviate this situation.
U.S. Treasury Secretary Yellen told lawmakers last Wednesday that tax increases will be needed to pay for infrastructure projects and other public investments.
According to the Associated Press, Biden plans to announce part of his "rebuild better" package in Pittsburgh on Wednesday. U.S. officials say that, in terms of scope, this ambitious plan aims to invest generations in infrastructure, revitalize domestic manufacturing, combat climate change, and maintain the competitiveness of the United States and China. Including a $3 trillion tax increase.
Business Insider reported that on Wednesday, Biden is expected to announce the first legislative part of the infrastructure plan, focusing on rebuilding roads and bridges, expanding clean energy investment, and creating infrastructure for electric vehicles. This part of the plan will also include funding for the care of the elderly and the disabled. As for the second part of the plan, the focus is on "caring for the economy." White House spokesperson Jen Psaki said in an interview with Fox News on Sunday (March 28) local time that the plan will be announced in "a few weeks" and will "address many of the American people who are struggling." problem". Psaki said: "We are still drawing up the overall plan, and President Biden is also eager to listen to the opinions of both parties."
On March 28, local time, Psaki said that President Biden will deliver a speech in Pittsburgh, Pennsylvania on Wednesday (March 31) local time, detailing the first bill focusing on US infrastructure reform. According to media reports, the first bill will focus on solving infrastructure reform issues such as the reconstruction of roads and bridges in the United States and the expansion of network broadband in rural areas. The second bill to be announced in April will involve issues such as child care measures and medical care subsidies.
Earlier this month, Biden ignored the opposition of Republicans and signed the $1.9 trillion economic stimulus plan into law.
According to a Fox News report on March 28, Psaki said on Sunday that President Biden, after promoting a $1.9 trillion new crown virus rescue package earlier this month, will "make changes to his new crown virus recovery plan in April." More to say", the plan focuses on health care and other issues. In an interview with Fox News Sunday, Psaki said: "When the President advocated the American rescue plan, he talked about two phases: rescue and recovery. What the American people will hear this week is part of his plan. This is the first step in his recovery plan, which includes investment in infrastructure."
Psaki said: "He will make more comments on the second part of his recovery plan later in April, including some of the things you talked about-health care, child care, and solving these problems. Now. There are many women who have left their jobs. This is a crisis. We are still considering the entire plan." Psaki said that this plan and the Democratic Party’s expected infrastructure bill will be "two separate proposals." She said: "We will work with the Senate and the House of Representatives to see how we can proceed."
Gennadiy Goldberg, senior U.S. interest rate strategist at TD Securities, said: "People are very worried about what President Biden will announce on Wednesday and whether this will significantly push up the deficit in the next few years, which puts pressure on the bond market."
Stephen Innes, chief global market strategist at Axi, said that although gold is still a tool to hedge against inflation, as the yields of US Treasuries rise, the function of gold cannot be highlighted. Innes said: "If bond yields can stop rising, then when inflation heats up, gold prices will go up."
