Gold prices today ease on profit booking at higher levels

Marco Green
May 28, 2020

The recent equity rally "is an indication that investors are getting optimistic about the reopening of the economy and the drug-treatment development", Katerina Simonetti, senior portfolio manager at UBS Private Wealth, said on Bloomberg TV.

Britain hoovered up nearly 30pc of all foreign direct investment into the European technology sector a year ago, putting it ahead of any other nation and setting up the economy for the increasingly digital post-coronavirus era.

Meanwhile, equities continued to rally despite growing political tensions between China and the U.S., which normally would lessen the appeal of riskier assets to investors and support bullion prices. On Tuesday, reports indicated the USA was considering sanctions over Beijing's crackdown in the former British colony.

The Stoxx Europe 600 Index ended higher and Italy's government bonds rose after details emerged of Europe's package of grants and loans for up to 750 billion euros ($823 billion) to overcome the region's deepest recession in living memory.

The S&P 500 has leapt about 36% since the global coronavirus pandemic dragged it to the year's low on March 23, but there are concerns the rally may be overdone and susceptible to a protracted pullback given the US economy is mired in its worst downturn since the Great Depression.

Asian stocks were mixed on Thursday, with Hong Kong shares tumbling amid deteriorating US-China ties, while some other markets showed resilience. The Federal Reserve's "Beige Book" survey due for release later Wednesday may provide clues on the inflection point for the economy and near-term outlook for jobs.

Thursday brings the USA jobless claims reading for the week ended May 23.

Federal Reserve Chairman Jerome Powell participates in a virtual discussion on Friday.

This all saw the Dow end up 553.16 points, or 2.21%, at 25,548.27, the S&P 500 add 44.36 points, or 1.48%, to close at 3,036.13, and the Nasdaq add 72.14 points, or 0.77%, to finish at 9,412.36.

Futures on Japan's Nikkei 225 were little changed in Singapore. The Topix index also rose 0.93 percent.

The offshore yuan was little changed at 7.1423 per United States dollar.

The British pound declined 0.6% to $1.226.

Although 10-year yields are up from an all-time low of 0.4980% struck in March, they are still a whopping 120 basis points below highs seen in January. "We're not going to get back to full employment or even an unemployment rate below 10% any time this year and maybe it will take most of next year".

West Texas Intermediate crude added 2.5 per cent to US$34.07 a barrel.

With U.S. stocks breaking through key levels to the upside on the charts, gold traders are being encouraged to lighten up their bullish positions, which have otherwise been supported by geopolitical issues related to Hong Kong and worries over a global recession.

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