[Gold Closing] U.S. Confirms Over 420,000 Cases; Trump and “America’s Zhong Nanshan” Predict Peak Soon—Gold Struggles at High Levels

　　Gold prices held steady on Wednesday, April 8, as markets anticipate that the U.S. COVID-19 outbreak is nearing its peak.

　　On Wednesday morning in the Asian session, international spot gold opened at $1,646.50 per ounce, climbed as high as $1,656.20 per ounce, dipped to a low of $1,640.63 per ounce, and closed at $1,644.39 per ounce, down $2.01 or 0.12%.

　　COMEX June gold futures settled up $0.60 at $1,684.30 per ounce.

　　David Meger, head of metals trading at High Ridge Futures, said, “As governments around the world and central banks deploy helicopter money and stimulus packages to boost the economy, it’s essentially like a money-printing machine in action—creating a highly favorable environment for gold.”

　　U.S. stock market major indices opened higher for the third consecutive trading day, as markets anticipate that the coronavirus outbreak in the United States has likely peaked and that Congress will pass additional relief measures to bolster the economy.

　　According to real-time data from Worldometers, the number of confirmed cases in the United States has exceeded 420,000, reaching 425,828, while the death toll has risen to 14,604. Globally, the total number of confirmed cases has climbed to 1,506,420, with 88,147 deaths.

　　U.S. President Donald Trump said on Tuesday that the United States may have already reached the peak of the coronavirus outbreak’s “curve,” and reiterated his hope that the U.S. economy will recover as soon as possible.

　　“America’s Zhong Nanshan,” Dr. Anthony Fauci, director of the U.S. National Institute of Allergy and Infectious Diseases, told Fox News on Wednesday that the number of coronavirus-related deaths in the United States is now lower than initially estimated, and noted that conditions should improve after this week. However, he added that efforts to combat the virus should be stepped up.

　　Jim Wyckoff, senior analyst at Kitco Metals, said in a report: “The United States and Europe are hoping that the models predicting that next week will be the worst week in terms of new virus infections are correct—that is, that the infection curve will peak then.”

　　“From a technical standpoint, gold bulls enjoy a solid overall short-term technical advantage in an uptrend… This strongly suggests that, at least in the near term, the path of least resistance for prices remains sideways consolidation with a bias to the upside—and this could persist for an extended period.”

　　Market participants are also closely watching the OPEC and its allies’ meeting, which could result in further production cuts to support oil prices that have already fallen sharply.

　　Fundamental bullish factors

　　1. According to real-time data from Worldometers, the number of confirmed cases in the United States has exceeded 420,000, reaching 425,828; the death toll has risen to 14,604. Globally, the number of confirmed cases has climbed to 1,506,420, with 88,147 deaths.

　　Federal Reserve Governor Robert Kaplan projects that U.S. GDP could contract by 4% to 5% in 2020. The second quarter may see a GDP decline of 25% to 35%, followed by a recovery in the second half of the year. The unemployment rate is expected to peak at around 15% before falling to 7% to 8% by year-end. The financial and employment crises may prompt households to increase savings and reduce spending.

　　2. Data released by the U.S. Department of Labor on Friday, April 3, showed that nonfarm employment fell by 701,000 in March—only the beginning of the economic toll exacted by the coronavirus crisis. This marked the first decline in employment since September 2010 and brought the drop close to the peak of 800,000 recorded during the financial crisis in May 2009. The unemployment rate rose from 3.5% to 4.4%, the highest level since August 2017, as employers have only just begun cutting jobs while social-distancing measures aimed at curbing the spread of the virus have shut down large swaths of the U.S. economy. Another measure—tracking discouraged workers and those employed part-time for economic reasons—jumped from 7% to 8.7%, the highest level since March 2017. Concurrent with the rise in the unemployment rate, the labor-force participation rate plunged to 62.7%, a decline of 0.7 percentage points that represents the lowest level since August 2018, after having trended steadily higher in the months leading up to this.

　　3. On Thursday, April 2, the U.S. Department of Labor reported that 6.648 million people filed for unemployment benefits in the week ending March 28, setting a new record. Economists expect that, as coronavirus-related shutdowns continue to spread across the country, another 4 million to 5 million workers will apply for unemployment benefits next week—with some estimates projecting as many as 9 million.

　　4. On Wednesday, April 1, the Institute for Supply Management (ISM) reported that the March manufacturing index fell below the 50.0 boom-bust threshold. The ISM manufacturing index dropped from 50.1 in February to 49.1 in March. Data show that a sharp decline in new orders and output drove the contraction in economic activity, while prices in the sector also declined. Commentators note that although the contraction in U.S. manufacturing activity in March was less severe than expected, the COVID-19 pandemic has pushed new orders for factories to an 11-year low, reinforcing the view that the U.S. economy is already in a recession. The pandemic has not only disrupted supply chains but also dampened demand; transportation has all but come to a standstill, and restaurants, bars, and other social venues have been forced to close.

　　5. A report released on Wednesday, April 1, by ADP and Moody’s Analytics shows that U.S. businesses shed 27,000 jobs in early March, before the economic shutdown caused by the coronavirus reached its peak. Based on the millions who have already filed for unemployment benefits, the actual job losses this month are likely far more severe. The Wednesday report covers the period through March 12. Mark Zandi, Moody’s chief economist, said this marks the first decline in private-sector employment in a decade, and total unemployment could rise by 10 million to 15 million. Speaking on a media conference call, Zandi stated: “Employment had been growing steadily for 10 consecutive years—until the virus put an end to that trend.”

　　6. U.S. consumer confidence has fallen to its lowest level since mid-2017, as government efforts to mitigate the coronavirus pandemic have led to widespread business closures and left millions of Americans unemployed. According to a report released Tuesday, March 31, by the Conference Board, the index dropped by 12.6 points—the largest decline since 2011—to 120. The median economist forecast had been for a drop to 110. The survey’s reference date was March 19.

　　Fundamental bearish factors

　　1. According to data from Johns Hopkins University, the daily increase in COVID-19 cases in the United States has declined since last Friday. Since then, the daily growth rate of global cases has also decreased.

　　An influential model that tracks the U.S. coronavirus pandemic now projects lower death tolls and reduced demand for hospital beds compared with last week’s estimates.

　　On Tuesday, the model projected that approximately 82,000 people would die from coronavirus disease by August. By Wednesday, this estimate had been revised downward to 60,415.

　　On Wednesday, April 8, Dr. Anthony Fauci, director of the U.S. National Institute of Allergy and Infectious Diseases, told Fox News that the number of coronavirus-related deaths in the United States is now lower than initially estimated, and noted that conditions should improve after this week. However, he added that efforts to combat the virus should be stepped up.

　　2. Italy announced on Tuesday, April 7, that the number of confirmed COVID-19 cases had risen from 132,547 to 135,586, while the death toll increased by 604 to 17,127. The rate of new cases is the lowest since March 13.

　　On the 7th, local time, British Acting Prime Minister Dominic Raab stated that the government’s current “social distancing” measures are playing a crucial role, significantly reducing infection rates and hospital admissions to ensure that the National Health Service has sufficient capacity to cope with the existing patient load.

　　In recent days, the number of confirmed COVID-19 cases in the United States appears to have peaked and begun to decline. On Tuesday, New York Governor Andrew Cuomo reported that, despite the state recording its largest single-day increase in deaths, the number of patients hospitalized is falling.

　　In Asia, South Korea reported fewer than 50 new infections for the second consecutive day. As of April 6, China also recorded no new deaths, the first time this has occurred since daily updates began being released in January of this year. These two Asian countries were among those that experienced a sharp surge in infection rates early in the outbreak, with China reporting its first cases.

　　3. The Institute for Supply Management (ISM) reported that the nonmanufacturing index fell to 52.5 in March, better than the expected 43.0. It is clear, however, that this report may not fully capture the virus’s impact on the economy, suggesting that future data for the sector could be considerably worse. In a statement, ISM Chairman Anthony Nieves said: “Respondents are concerned about the coronavirus’s effects on supply chains, operational capacity, human resources, and finances, as well as its broader implications for the overall economy.”

　　4. On Monday, March 30, the National Association of Realtors (NAR) reported that pending sales of existing homes in the United States rose for the second consecutive month, with the existing-home sales index increasing 2.4% from the previous month to 111.5. NAR’s chief economist noted that February’s data did not yet reflect the significant impact of the COVID-19 pandemic, and warned that as layoffs mount and a recession looms, the housing market could veer off course. Earlier this month, another set of data showed that U.S. existing-home sales climbed to a 13-year high in February.

　　5. On Monday, March 30, Michael Ryan, Executive Director of the WHO’s Health Emergencies Programme, stated that there is currently no effective treatment or medication for COVID-19; however, certain drugs used to treat HIV or other coronaviruses such as MERS and SARS may prove effective against the novel coronavirus. Some of these drugs may shorten the duration of the illness, while others may reduce its severity. Michael Ryan urged the continued acceleration of ongoing randomized controlled trials being conducted worldwide.

　　Market Outlook

　　1. Pierre Lassonde, former chairman of the World Gold Council (WGC) and chairman of gold mining company Franco-Nevada, says that as gold prices rise to levels approaching those of the Dow Jones Industrial Average, they should surge even higher—potentially reaching $20,000 within two to five years. “When I look at the current situation,” Lassonde told Kitco News, “I realize that monetary expansion takes time to percolate through the economy and reach consumers. I believe supply-chain disruptions will persist for another two to five years, and I’m confident we’ll see the Dow-to-gold ratio move very close to 1:1—if not exactly 1:1.” He added: “I simply don’t know whether the Dow will still be at 23,000 or dip to 16,000. Even if the ratio ends up at 2:1, what’s clear is that gold prices will be substantially higher than they are today.”

　　2. “Gold has remained relatively stable, as markets anxiously await the outcome of the OPEC meeting, which could go either way. On the other hand, we cannot yet say that the COVID-19 pandemic in Europe and the United States has subsided or come to an end; uncertainty persists,” noted Xiao Fu, an international analyst at Bank of China. “Investors are also awaiting the minutes from the Federal Open Market Committee (FOMC) meeting to gauge whether there are any signs of a new round of stimulus measures. We are currently in a period of extreme volatility, and policy surprises cannot be ruled out.”

　　3. Margaret Yang Yan, an analyst at CMC Markets, stated: “In the medium to long term, gold prices are expected to rise due to quantitative easing and monetary stimulus measures implemented by central banks worldwide.”

　　4. Todd Horwitz, Chief Market Strategist at BubbaTrading.com, wrote that on Tuesday, gold, silver, and platinum all appeared poised to surge—only to see conditions take a sudden turn for the worse. After reaching intraday peaks and hitting recent highs in overnight trading, metal prices began to decline. All three had topped out Monday evening and continued to slide on Tuesday. Horwitz noted that they remain firmly long and expect to revisit those highs. In fact, he believes gold is on track to set new records and continue climbing. While the sell-off may be healthy and part of the market’s natural cycle, for now, it appears likely that these metals will keep advancing until further notice.

　　Key Focus for Thursday

　　08:30 Bank of Japan Governor Haruhiko Kuroda will deliver a speech.

　　14:00 Germany’s February Seasonally Adjusted Trade Balance

　　14:00 UK February Industrial Output and Goods Trade Balance

　　19:30 – The European Central Bank releases the minutes of its March monetary policy meeting.

　　20:30 U.S. March Producer Price Index

　　20:30 U.S. Seasonally Adjusted Initial Jobless Claims for Last Week

　　22:00 U.S. April University of Michigan Consumer Sentiment Index (Preliminary)

　　22:00 Federal Reserve Chair Jerome Powell Delivers Remarks on the U.S. Economic Situation

　　22:00 OPEC+ Plans to Discuss New Cooperation at Its Meeting

　　Time to be determined: French President Macron delivers a national address.

　　At 4:00 a.m. the following day, San Francisco Fed President Daly will deliver a speech.