CNBC/Yun Li and Fred Imbert
Dow jumps 400 points as Mnuchin says lawmakers will give stimulus a ‘serious try’

U.S. stocks climbed on Wednesday, the last day of September, amid rising hopes for further fiscal stimulus. The market is still on track for its first negative month since March.

The Dow Jones Industrial Average jumped 410 points, or 1.5%, while the S&P 500 gained 1.1%. The tech-heavy Nasdaq Composite climbed 1.2%.

Treasury Secretary Steven Mnuchin struck an optimistic tone about reaching a coronavirus aid deal on Wednesday after the stalemate in Washington dragged on for weeks.

“I say we’re going to give it one more serious try to get this done and I think we’re hopeful that we can get something done,” Mnuchin said at the Delivering Alpha conference presented by CNBC and Institutional Investor. “I think there is a reasonable compromise here.”

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Bloomberg/Ranjeetha Pakiam and Elena Mazneva
Gold-Buying by Central Banks Seen Climbing From Near Decade Low

Gold buying by central banks, an important driver of bullion’s advance in recent years, is forecast to pick up in 2021 after a slowdown this year.

Citigroup Inc. sees demand from the official sector rising to about 450 tons after a drop to 375 tons this year, which would be the lowest in a decade. HSBC Securities (USA) Inc. expects a slight up-tick to 400 tons from an estimated 390 tons in 2020, potentially the second-lowest amount in 10 years.

While the forecasts are far from the near-record purchases of more than 600 tons a year seen in both 2018 and 2019, increased central bank activity will help bolster bullion. Russia could return to the market next spring and China’s central bank may resume adding to reserves after the U.S. elections, Citi said in a report this month.

This development may have a bigger impact on the market if exchange-traded funds — key drivers of demand in 2020 — slow their buying as global economies recover from the coronavirus pandemic.

“Although official sector gold demand was quite robust in 2019 and 2018 and is softer this year, it is not necessarily weak by historical standards,” said James Steel, chief precious metals analyst at HSBC. “While the influence of central bank activity should not be discounted, it is taking a backseat to ETFs and other forms of demand this year.”

Bullion prices and ETF assets surged to a record in 2020 as investors sought havens amid the pandemic, looser monetary policy and the potential debasement of fiat currencies.

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Marketwatch/Andrea Riquier
Market swings are a sign ‘something is lurking,’ says strategist who called ’08 crisis

“After that whippy rally out of nowhere yesterday, I started to think how the current market pattern of instability and volatility is so much like what we saw back in January and February of this year,” wrote David Rosenberg, a long-time strategist now running his own firm, Rosenberg Research.

Rosenberg is often known as a bear, and he has had a glass-half-full view through most of this year. But he’s also known for predicting the subprime mortgage crisis, even while working for one of the biggest enablers – and victims – of the bubble, Merrill Lynch.

“Does this behavior look normal to you?” he asked. “Any reason, you think, for all this volatility? Could it be a signal that something is lurking around the corner?”

It’s not clear what that “something” could be, although there’s a long list of headwinds, from the U.S. presidential election to a no-deal Brexit to the seemingly endless string of natural disasters. And underneath it all are rising global COVID-19 case counts that could swamp health systems and sap economies – which forecasters expect to only get worse with the return of winter.

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Kitco/Anna Golubova
This is the time to buy gold, says Wells Fargo

Gold prices saw a $200 tumble in September, which Wells Fargo is viewing as a great buying opportunity during a well-expected correction.

“We’re buyers of gold,” Wells Fargo head of real asset strategy John LaForge wrote on Monday. “After a great seven-month run, gold cooled off in August and September. Gold spot prices today sits about $200 lower than its all-time high of $2,075, per ounce set in August.”

At the time of writing, December Comex gold futures were trading at $1,897.70, up 0.82% on the day and spot gold was at $1,893.10, up 0.64% on the day.

The strength of the U.S. dollar over the past few weeks has been the reason behind gold’s retreat, noted LaForge.

“We believe that this 10% pullback is partly due to froth and partly due to the U.S. dollar,” he wrote. “From the froth perspective, gold’s 37% year-to-date rally through the August 7 high had been quite dramatic. It was warranted, but dramatic nonetheless.”

However, Wells Fargo’s optimistic view on gold has not changed with the bank remaining bullish on the yellow metal. “The fundamental backdrop looks good. Interest rates remain low, money supplies excessive (quantitative easing), and we are doubtful that the U.S. dollar’s September rally has long legs,” LaForge said.

“We view gold at these prices as a good buying opportunity and, as evidenced by our 2021 year-end targets, expect higher gold prices.”

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