Gold dips but then catches a bid once again to hold above the pivotal $1800 area
- Gold has pushed over 0.50% higher on Monday as the bulls keep control.
- Other precious metals are performing well to as silver joins the rally.
Although the yellow metal is not accelerating at the rate we have seen in recent days. The bulls are not ready to let go just yet. Gold is once again above the USD 1800 per troy ounce level after dipping below the psychological resistance area at the end of last week. Many analysts are betting on some more monetary stimulus after the US continues to struggle with the coronavirus pandemic. COVID-19 cases continue to rise in the "hot states" of Texas, Arizona and Florida. On Monday Arizona reported 1,357 new cases and 8 new deaths. Florida's new cases also rose 8,038 which represents a 4.7% rise vs the 7-day average of 4.4%.
Away from the COVID-19 pandemic, international relations between the US and China are also rocky again on Monday. White House Economic Advisor Kudlow said Trump is not in a "good mood" about China. He also went on to say the government will need to have a hard look at Chinese companies listed in the US. Something tells me there is lots more to come from this conflict.
The US dollar has struggled today helping the gold bulls. EUR/USD is trading 0.68% higher and this comes as the global risk tone has shifted to the positive side. There have been some reports of a potential vaccine for the coronavirus doing the rounds. BioNTech stock jumped 19.6% and Pfizer also climbed 4.2% as two of their experimental coronavirus vaccines received the U.S. FDA's "fast track" status. It is also the start of earnings season with PepsiCo pushing 2.13% higher despite net sales falling 3.1% during the second quarter. The companies food business fared better, with products like Cheetos and oatmeal seeing strong growth.
A special mention has to be made for silver which seems to be edging closer to the elusive USD 20 per troy ounce level. The metal has hit USD 19.30 per ounce and has been on an impressive run since hitting a low of USD 11.63 per ounce on 11th March 2020. The gold/silver ratio has been heading lower as gold stalls at its current elevated levels and the rate of change favours XAG/USD. Maybe in the medium-term silver has more upside potential and the USD 1800 per ounce level is so strong for gold.
Looking ahead to the rest of the week, there are some key announcements to keep an eye on with the ECB and BoC both delivering their latest rate and monetary policy decisions. The highlight will surely be Chinese GDP and the market will be looking forward to getting the latest information about their road to recovery in the nation. In terms of key events for the rest of the session, we are due to hear from Fed's Kaplan and receive the latest Federal Budget Balance.