News

Gold Hits Record High on COVID19 Woes and US-Sino Tensions

Metals

Precious metals prices continued their strong upside rally, supported by various factors. First, the failure to control the coronavirus spread is raising uncertainty over the global economic outlook and increasing the chances of further monetary and fiscal stimulus from central banks and governments. Second, the intensifying tensions between China and the United States are also weighing-in on risk appetite. The ongoing clashes between the world's largest economies could ruin all hopes for economic recovery. During the Asian session, the price of a gold ounce rose to a record high of $1944, the price of a silver ounce rallied to $24.39, the highest since 2013, and palladium futures advanced to a four-month high of $2329.

USD

The dollar index, which measures the greenback against a basket of major currencies, fell sharply to 93.84, the lowest level since September 2018, as amid concerns over the economic recovery. The significantly growing coronavirus cases and the escalating tensions between China and the United States raised woes over the expected economic recovery. These developments are raising the bets over fresh stimulus from the Federal Reserve and the US government on the medium run. On the other hand, the stable situation in the rival economies made their currencies more attractive than the dollar. The EURUSD soared to almost a two-year high of $1.1725, the GBPUSD edged higher to $1.2858, the highest since early March, and the USDJPY declined to 105.38.

Equities

Major US stock-index futures rebounded softly during the early trading hours of the week amid hopes of a fresh round of stimulus. The US Treasury Secretary Steven Mnuchin stated that the Republicans finalized a $1 trillion bill to fight the impact of the Covid19 outbreak. The Dow Jones Industrial Average futures rose to 26497, the S&P500 futures rallied to 3223, and Nasdaq futures inched higher to 10541.

Oil

Oil prices continued to trade in a tight range awaiting fresh fundamental drivers. Investors are worried about the impact of the continuous spread of COVID19 on the global economic recovery but are also optimistic over the effectiveness of the monetary and fiscal stimulus provided by central banks and governments. The West Texas Intermediate crude September delivery dipped to $40.88, and Brent blend September delivery held steady near $43.

Major Economic Events

GMT Country Event Expectation Previous

12:30

US

Durable Goods Orders (MoM) (Jun)

7.2%

15.7%

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