CNBC/Adam Jeffery and Valerie Block
Washington prepares for Joe Biden’s Inauguration Day
The nation will mark the inauguration of the 46th president of the United States on Wednesday, two weeks after the deadly insurrection at the U.S. Capitol.
Some 25,000 armed National Guard members will be on high alert as Joe Biden takes the oath, becoming the oldest president in history at 78. Kamala Harris will make history as the first female, Black and South Asian vice president.
The National Mall, historically filled with onlookers, will be closed to the public and dotted with 200,000 flags to represent the crowd that might have assembled. A small area in front of the Capitol has been reserved for socially distanced guests in a nod to the coronavirus pandemic, which has taken more than 400,000 lives in the U.S.
Gold prices to push to $2,300, silver to hit $40 in 2021 – MKS
The gold market is starting 2021 on a weak note as it struggles to find consistent buying momentum; however, many analysts aren ’t giving up on the precious metal anytime soon.
In its 2021 outlook report, pushed earlier this week, analysts at MKS are remaining extremely bullish on both gold and silver. Despite the weak start to gold, the European precious metals firm said that it expects gold prices to push to $2,300 an ounce this year. The analysts said that they see prices averaging the year around $2,072 an ounce.
“While the global economic recovery shows some positive signs, we will continue to face uncertainties, especially in the first half of the year,” the analysts said. “In the context of low global real interest rates, a slow recovery in growth, higher market volatility and a weakening USD, gold shall remain an asset of choice in investors ’ portfolios as a safe haven and insurance against disruptions.”
Gold Rises With Dollar Outlook in Focus After Yellen Weighs In
Gold gained as the dollar eased following commentary on the U.S. currency, the merits of massive stimulus, and the outlook for trade from President-elect Joe Biden‘s cabinet nominees.
Biden’s pick for Treasury secretary, former Federal Reserve chair Janet Yellen, disavowed using exchange-rate policy to obtain a competitive advantage, a difference from Steven Mnuchin, who repeatedly expressed preference for a weaker dollar. At the same time, she did not say she backs a “strong” dollar.
Yellen also told the Senate Finance Committee that the slew of state spending was needed to fight the coronavirus pandemic, while playing down concerns about the rising debt it creates amid an era of enduring low interest rates. Yellen could be confirmed in her role as soon as Thursday.
Gold has declined in the opening weeks of 2021 as Treasury yields gained along with the U.S. currency, while stocks also advanced. Investors are seeking to determine the traditional haven’s outlook under the Biden administration, with the new president set to be inaugurated later Wednesday.
“Gold has been facing headwinds from a strong U.S. dollar and higher real rates so far this year,” said Stephen Innes, chief market strategist at Axicorp. Ltd. Still, “maximum stimulus overdrive” and a slightly weaker dollar paint an encouraging backdrop for gold prices provided real rates oblige, he said. While the market is trying to hold prices above key support, gold has struggled to recover convincingly past the $1,850 psychological level, he added.
CNBC/Yen Nee Lee
Oaktree’s Howard Marks says this tax proposal in the U.S. makes investing less attractive
U.S. Treasury Secretary nominee Janet Yellen reportedly said she would consider taxing unrealized capital gains — but billionaire investor Howard Marks said it’s not a practical plan and could hurt sentiment among investor.
“I think that would hit sentiment. It would obviously make it less attractive to be an investor, all things being equal,” said the widely followed investment guru, who is also co-chairman and co-founder of Oaktree Capital.
Unrealized capital gains refer to the theoretical increase in value of assets that an investor holds onto. The gains are only realized when the investor sells the asset at a price higher than what was initially paid to buy it.
The possibility of taxing wealthy investors on those yet-to-be realized gains was raised by Sen. Ron Wyden, D-Oregon, who will likely become chairman of the Senate Finance Committee.
Yellen, nominated by U.S. President-elect Joe Biden to head the Treasury, said she would consider such a proposal to boost government revenues, reported Reuters. That remark was made during her confirmation hearing on Tuesday and “raised eyebrows” among some senators and Wall Street investors, according to the news report.
The only way investors can avoid that taxation is by not making any profit from their assets, which is “not a great idea,” Marks told CNBC’s “Street Signs Asia” on Wednesday.
“Now the question is … what are people gonna do with their money? Money has to go some place, it can’t be in the ether,” he said.
‘Bulk of gold price gains to materialize in first half of 2021’ – Standard Chartered
The new year will trigger new highs for gold, according to Standard Chartered, which sees the majority of gains in the first half of 2021.
“We maintain a positive view on gold; expect prices to retest USD 2,000/oz threshold and reach new highs,” Standard Chartered precious metals analyst Suki Cooper said on Friday. “We believe the bulk of gold gains are likely to materialize in the first half of the year.”
Gold is projected to reach $1,930 an ounce in the first quarter and then climb to $2,075 in Q2, according to the report. That is more than a $230 rise from the current levels. February Comex gold futures were last trading at $1,839.70, up 0.54% on the day.
“Investors will continue to allocate into gold, given the likelihood of a weakening USD, real yields remaining negative, accommodative monetary policy, further fiscal stimulus, and rising inflation expectations,” Cooper pointed out.
Gold has been stuck around the $1,850 an ounce level since the start of the year amid a mix of contrasting forces, including rising inflation expectations, stronger U.S. dollar, and higher yields. “Gold is caught between conflicting macro drivers a