CNN Business/Paul R. La Monica
Gold tops $1,800 and hits highest level since 2011
“These are strange times on Wall Street. Stocks are surging on optimism about a potential economic rebound. Yet investors are still very nervous about the growing threat of a second wave of Covid-19 cases in the United States.
Just look at the rally in gold.
The price of the metal is now above $1,800 an ounce — its highest level since September 2011 — and it is creeping toward that record high of more than $1,900. Gold has soared nearly 19% so far in 2020.
Gold’s continued surge is a bit curious given the comeback in the broader market. The pop in gold prices earlier this year made more sense since gold often tends to do well in times of financial stress, when fear is prevalent.
After an initial dip following the 2008 Lehman Brothers bankruptcy, gold rallied as the market melted down later that year and into early 2009, for example.”
Dow Jones Futures: S&P 500 Stocks & Coronavirus
“The Dow Jones futures are trading modestly lower as traders are casting some doubts about the re-opening of the economy in the hard-hit southern states in the US. There are also concerns that the tensions between the US and China are strengthening every day due to the security law imposed in Hong Kong. Speculations are that the Trump administration may target the Hong Kong’s dollar peg. For Trump, this could be another way to punish China for its action in Hong Kong, but of course, the question is whether the US has the ability to punish China without facing some sort of counteraction.
Beijing can begin a currency war by devaluing the Chinese Yuan. That will not bode well for the US. So far, the idea of targeting the Hong Kong peg has gained much attention but hasn’t yet reached the White House.
The Dow futures, along with the S&P 500 futures, are also paying attention to new warnings from Fed officials who think that the US unemployment rate is likely to remain high despite the US economy re-opening. Social distancing is one of the things that is going to harm tourism and the retail industry. Without innovating new strategies, the path to recovery will be arduous.”
Yahoo Finance/Julia LaRoche
Gundlach lashes Fed’s ‘incredible fiscal lending’ during coronavirus collapse
“Billionaire bond investor Jeffrey Gundlach believes the Federal Reserve has “propped up the economy” with extraordinary feats of lending and bond buying that have curbed market volatility during the COVID-19 crisis, but may come back to haunt policymakers.
In a recent interview with Yahoo Finance, the CEO of $135 billion DoubleLine Capital hit out at what he called “the most incredible fiscal lending [Fed policymakers] have ever contemplated.”
Since the early days of the coronavirus crisis, the central bank has spent trillions to backstop the economy — buying a host of corporate bonds — placating a whipsawed market in the process. Those efforts have sent the Fed’s balance sheet spiking well above $7 trillion.
“The Fed has decided that they want to pull out all the stops to reduce market and economic volatility,” Gundlach said. “’What they’re doing is really a bridge further than they have ever gone before.””
Gold prices at 9-year highs, bulls want more
“Gold prices are modestly up in early U.S. trading Wednesday and scored another nine-year high overnight. Meantime, silver prices notched a five-week high as the precious metals bulls are pressing the accelerator a little harder. Both markets remain firmly bullish from a charts perspective, suggesting still more upside in the near term. August gold futures were last up $4.30 an ounce at $1,814.30. September Comex silver prices were last up $0.121 at $18.825 an ounce.
Safe-haven demand is also seen in gold and silver amid the rise in Covid-19 infections and on worries about the longer-term ramifications of central banks opening up their spigots of free-flowing cash into their financial systems. Gold bulls are reckoning the piper will be paid at some point down the road.
Global stock markets were mixed in overnight trading. China’s stock market continues to surge following a government-owned media story telling Chinese investors it’s time to buy shares. The U.S. stock indexes are pointed toward mixed openings when the New York day session begins. Many global stock markets have paused at mid-week following recent rallies. It could be that the alarming rise in Covid-19 cases in some countries, including the U.S., has finally dented trader and investor risk appetite. The U.S. reported a daily record of 60,000 new Covid cases on Tuesday.”