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Gold gains 1% on dollar weakness, dovish Fed policy hopes
· Gold jumped about 1% on Monday as the dollar weakened, while expectations around the U.S. Federal Reserve maintaining its dovish monetary policy this week further boosted the safe haven metal’s allure.
· Spot gold rose 0.9% at $1,959.64 per ounce. U.S. gold futures rose 1.1% to $1,963.7.
· “Gold is rising as the dollar is under quite a bit of pressure. We also saw Steven Mnuchin indicating that they want some kind of fiscal stimulus deal done, so that would further weaken the dollar,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago, referring to the U.S. treasury secretary.
“The Fed is expected to maintain the target rate of inflation, we’re going to run 2% for some time and they will increase Quantitative Easing (QE) buying, so gold should remain supported on that,” Streible said.
· The dollar fell 0.4% against rivals, bolstering gold’s appeal for investors holding other currencies. Mnuchin said there still could be a deal with the U.S.
· Congress for more federal coronavirus-related aid and that he looked forward to a bipartisan proposal from lawmakers expected later on Monday. Bullion has risen 29% this year prompted by massive stimulus from global central banks to combat the impact of the coronavirus pandemic. Investors are now eyeing the Fed’s policy decision due on Wednesday.
· Market participants are also waiting for the Bank of Japan and the Bank of England’s policy decisions due on Thursday.
· Meanwhile, the European Union ramped up pressure on Prime Minister Boris Johnson to step back from breaking the Brexit divorce treaty. Gold will continue to move higher on political uncertainties in the United States, on Brexit and overall the weak economic conditions in the world, said Jeffrey Christian, managing partner of CPM Group.
· Silver rose 2% at $27.26 per ounce, platinum gained 3.1% to $953.72, while palladium climbed 1% to $2,343.02.
· Johnson lashes out at EU as he clears first hurdle for Brexit treaty breach
British Prime Minister Boris Johnson lashed out at the European Union on Monday as he won initial approval for a plan to breach the Brexit treaty, saying the move was needed because the bloc had refused to take a “revolver off the table” in trade talks.
Johnson won the so-called second reading parliamentary vote on the Internal Market Bill 340 to 263. A wrecking amendment was defeated shortly beforehand, though more will follow as he faces a growing rebellion in his party.
The EU says Johnson’s bill would collapse trade talks and propel the United Kingdom towards a messy Brexit while former British leaders have warned that breaking the law is a step too far that undermines the country’s image.
PM Johnson says bill will stop EU using 'stick' against UK
Britain’s plan to break the Brexit divorce treaty through an Internal Market Bill is a protection against any attempts by the European Union to use the “stick” of Northern Ireland against Britain, Prime Minister Boris Johnson said on Monday.
Responding to a legislator who said the EU was seeking to use Northern Ireland as a stick with which to beat Britain, Johnson said: “The intention of this bill is clearly to stop any such use of the stick against this country. That’s what it does.”
· Tear down your barriers, EU says after summit with China's Xi
European Union leaders told Chinese President Xi Jinping on Monday to open up markets, respect minorities and step back from a crackdown in Hong Kong, also asserting that Europe would no longer be taken advantage of in trade.
Anxious to show that the EU will not take sides in a global standoff between China and the United States, German Chancellor Angela Merkel joined the bloc’s chief executive and chairman to deliver a tough-talking message to Beijing.
· Treasury's Mnuchin, Fed's Powell to testify before Senate panel on Sept. 24 on coronavirus relief
U.S. Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell will testify before the Senate Banking Committee on coronavirus relief, the committee said in a statement on Monday.
Reference: Reuters, CNBC