Gold prices down as potential Japanese stimulus boosts risk appetite

Marco Green
May 25, 2020

South Korea, Australia and New Zealand were trading higher while E-minis for S&P500 were also slightly upbeat.

Japan is considering fresh stimulus worth over $929 billion, which mostly consists of financial aid programmes for companies hit by the coronavirus pandemic, the Nikkei newspaper said.

Overall trading is expected to be subdued with USA and United Kingdom markets shut for public holidays.

"Rising tensions between the U.S. and China around Hong Kong, trade policy and who is responsible for the 2020 economic dislocation is threatening to end the post March-trough rally,"said Perpetual analyst Matthew Sherwood".

Highlighting a return of political uncertainty, thousands rallied on Sunday to protest against Beijing's plan to impose national security laws on Hong Kong. Only unprecedented stimulus by global central banks held up world markets in recent weeks.

"There is a plethora of headwinds brewing to have investors question their expectations including earnings downgrades, balance sheet deleveraging, the absence of a (Covid-19) vaccine and rising geopolitical tensions".

Stocks edged higher on Monday after a survey showed German business morale rebounded in May, boosting optimism around economic re-openings, although caution prompted the dollar to snap a rare losing streak.

"Based upon such principles, the Islamic Republic of Iran emphasizes the importance of respecting the "One-China" policy, condemns any foreign interference in the internal affairs of the People's Republic of China and any harm to that country's national sovereignty and territorial integrity, and stresses the need for enforcing law and keeping order for the stability, welfare and security of people of Hong Kong", he added.

Ties between Washington and Beijing have soured since the outbreak of the new coronavirus.

"Rising tensions between the USA and China around Hong Kong, trade policy and who is responsible for the 2020 economic dislocation are threatening to end the post March-trough rally", said Perpetual analyst Matthew Sherwood.

Action in currencies was subdued. Sterling added 0.1 per cent to US$1.2176 while the Australian dollar was flat at US$0.6533 after losses on Thursday and Friday.

Oil prices, which have been driven higher for the past four weeks, were steady on Monday, with holidays in Singapore, London and NY dampening trade, as rising concerns over demand recovery offset supply cuts.

Brent was 12 U.S. cents, or 0.34 per cent higher, at US$35.25.

Brent was down 19 cents, or 0.5%, at US$34.94 a barrel by 0152 GMT.

Other reports by Click Lancashire

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