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Gold rises over 1% on expectations of large U.S. stimulus package

·         Gold jumped more than 1% on Monday as expectations of a large U.S. economic stimulus package bolstered bullion’s appeal as an inflation hedge.

 

·         Spot gold rose 1.1% to $1,831.28 per ounce by 2:23 p.m. EST (1923 GMT). U.S. gold futures settled up 1.2% at $1,834.20.

 

 

·         U.S. President Joe Biden and his Democratic allies in Congress cleared the path for a $1.9 trillion COVID-19 relief package as lawmakers approved a budget outline that will allow them to muscle the plan through without Republican support.

 

·         U.S. Treasury Secretary Janet Yellen said on Sunday the country would get back to full employment next year if Congress approves the stimulus package.

 

·         “Yellen talking about full employment by 2022 with $2 trillion in stimulus is driving the likelihood of a surge in inflation, which is good for gold,” said Tai Wong, head of base and precious metals derivatives trading at BMO.

 

·         Major U.S. stock indexes rose to record highs on the boost to economic recovery bets.

 

·         The “inflation trade” could supersede any negative impact the dollar might have on gold and silver, said Jim Wyckoff, senior analyst with Kitco Metals.

 

·         Gold also seemed to take some cues from another jump in Bitcoin, after Tesla Inc said it had invested around $1.5 billion in the cryptocurrency.

 

In its 2020 annual report, Tesla also said it may invest in “certain alternative reserve assets including digital assets, gold bullion, gold exchange-traded funds and other assets as specified in the future.”

 

·         But “Bitcoin and gold have been basically uncorrelated. The current surge in Bitcoin may be adding to the sentiment, but is not a primary driver,” BMO’s Wong said.

 

·         An interest in asset classes that are a store of value such as gold and silver, after Tesla’s Bitcoin purchase, is helping prices, said David Meger, director of metals trading at High Ridge Futures.

 

 

·         Australia saw record gold exports in 2020

The Australia natural resources industry has produced revenue records for iron ore, gold and copper in 2020, according to the Australian Bureau of Statistics data. The mining sector injected $270 billion into the Australian economy last year, contributing to 62 per cent of the country’s total export revenue.

Gold exports also saw a 12 per cent increase to its revenue at a record $27 billion.

 

·         Silver rose 2.2% to $27.42 an ounce.

·         Platinum rose 3.2% to $1,159.73.

·         Palladium fell 0.7% to $2,321.41.

 

·         Bitcoin surges above $44,000 to record after Elon Musk’s Tesla buys $1.5 billion worth

 

·         Bitcoin extends gains above $47,000 in Asia

Bitcoin added as much as 2.5% to hit a record high of $47,565.86 on Tuesday and has gained 61% for the year so far. Ethereum hit a record of $1,784.

 

·         China plans to hand out $1.5 million in a digital currency test during the Lunar New Year

 

·         Investors are keeping watch on a $1.9 trillion COVID-19 aid package for the United States that is expected to be passed as soon as this month.

 

·         Goldman Sachs boosts U.S. GDP estimate, sees COVID relief at $1.5 trillion

Economists at Goldman Sachs Group Inc on Monday bumped their U.S. GDP forecast for the second quarter up to 11% from 10% and said additional fiscal measures are likely to be valued at $1.5 trillion, up from their previous $1.1 trillion estimate.

On an annual basis, they raised their forecasts for 2021 and 2022 growth by 0.2 percentage points each, to 6.8% and 4.5%, respectively.

The bank’s economists also said that they had brought forward their forecast for the first rate hike by the Federal Reserve from the second half of 2024 to the first half in light of the upgrade to the growth forecast, the larger-than-expected decline in the unemployment rate in January, and signs of a “firmer” inflation outlook.

“We expect the FOMC to start tapering its asset purchases in early 2022,” the note said.

 

·         Biden minimum wage hike would boost incomes, but cut jobs in 2025: CBO

U.S. President Joe Biden’s plan to raise the minimum wage to $15 per hour by 2025 would cut employment by 1.4 million jobs that year and increase the budget deficit by $54 billion over the next 10 years, the Congressional Budget Office said on Monday.

 

·         CORONAVIRUS UPDATES:

Global Cases: 106.98 (+307,145)

Global Deaths: 2.33M (+7,843)

 

No. 1

U.S. Cases: 27.69M (+82,887)
U.S. Deaths: 476,336(+1,420)

 

No. 2 -7

India Cases: 10.84M (+8,947)

Brazil Cases: 9.54M (+23,439)

Russia Cases: 3.98M (+15,916)

UK Cases: 3.95M (+14,104)

France Cases: 3.34 (+4,317)

Spain Cases : 2,989,085 (+19,305)

 

 

Asian Updates:

No. 37

Japan Cases: 404,990 (+1,555)
Japan Deaths: 6,395 (+57)

 

 

No. 83

China Cases: 89,706 (+14)
China Deaths: 4,636

 

 No. 86

South Korea Cases: 81,185 (+289)
South Korea Deaths: 1,474 (+3)

 

No. 115

Thailand Cases: 23,557 (+186)
Thailand Deaths: 79

 

 

·         UK health expert says no reason to think Covid variant from South Africa will become dominant strain

 

·         AstraZeneca races to adapt Covid vaccine to variant as South Africa suspends rollout

 

·         CDC director warns Covid variants could reverse the recent drop in cases and hospitalizations

  

·         Google warns pandemic could hinder its ability to ‘maintain corporate culture’ in 2021

 

·         EU, UK envoys see better chance for global tax progress under Biden

 

·         U.S. President Joe Biden said the United States would not lift sanctions on Iran simply to get it back to the negotiating table, while Iran’s Supreme Leader Ayatollah Ali Khamenei said all sanctions should be lifted first.

 

·         North Korea developed nuclear, missile programs in 2020: U.N. report

 

·         Myanmar general pledges again to hold new election as anti-coup protests grow

 

·         U.S. concerned about restrictions on gatherings after mass demonstrations in Myanmar

 

·         U.N. rights forum to hold special session on Myanmar crisis: official

Reference: CNBC, Reuters, Worldometers, Kitco