Gold trading reminder: under the initial attack


In the Asian session on Friday (April 23), spot gold remained stable around 1784. On Thursday (April 22), the price of gold fell 0.55% from a two-month high, as strong initial application data boosted the strength of the US dollar and weakened the attractiveness of gold. The statement of the European Central Bank also put pressure on the euro and further supported the dollar. However, the news that Biden plans to introduce an ultra-high capital gains tax has hit the stock market, which limits the decline of gold price. The surge of the epidemic and the popularity of consumer demand are also expected to continue to support the rise of gold price.To get more news about fxbv, you can visit wikifx.com official website.

During the day, we mainly focused on the PMI data of manufacturing industry in Europe and the United States. PMI in the United States may continue to rise slightly in April, or it may be slightly bearish on gold prices.

As the recovery of the job market accelerated, the number of first-time jobless claims in the United States unexpectedly fell to a new low during the pandemic last week.

According to data released by the U.S. Department of labor on Thursday, as of the week of April 17, the number of first-time jobless claims under the regular unemployment benefit plan in U.S. states decreased by 39000 to 547000. The previous survey economists forecast a figure of 610 thousand. The previous week's figure was revised upward to 586000.

With the mitigation of the epidemic prevention and control measures, the U.S. job market is strengthening, and employers are hoping to fill the vacancies caused by the epidemic restriction measures. With the goal of vaccinating an average of 3 million people in the United States every day, the growth of the job market should further accelerate. Manufacturing, retail sales and other indicators released by the United States have also performed strongly in recent weeks.

In the week ending April 10, the number of people who continued to apply for unemployment benefits decreased by 34000 to 3.67 million.Texas and New York had the biggest declines in initial jobless claims, while Florida and Georgia also had larger declines.

Naeem Aslam, chief market analyst at vatrade, said the unemployment benefit report was stronger than market expectations, thus preventing further increases in gold prices.

The US dollar rose 0.18% against major currencies on Thursday due to positive economic news, in contrast to the European Central Bank's statement that the eurozone is weak and still needs to maintain the current pace of bond purchase.

According to sources, US President Biden will propose to increase the marginal income tax rate of individuals with an income of more than $1 million from 37% to 39.6%, and nearly double the capital gains tax rate to 39.6%.

After the news, the market's safe haven buying of the US dollar further strengthened the rise of the US dollar.

ECB president Lagarde said policymakers had not discussed phasing out the bond purchase program "because the time is not ripe". She said that despite progress in vaccination. And the economy shows signs of improvement, but the economy is still "full of uncertainty".

After Lagarde's speech, eurozone bond yields fell and the euro gradually fell from its daily high, which further supported the US dollar index and hit the price of gold.

"The euro will have a better upside potential before the new director and general manager of action in Europe," said Simpson

Bullionvault's ash said that although the European Central Bank's failure to expand quantitative easing seemed to disappoint the bond market, its policy statement stressed how intense quantitative easing is now. The huge scale of the current stimulus measures also means that the long-term prospects for investing in gold are solid.

According to people familiar with the matter, Biden's plan proposes to nearly double the capital gains tax rate of the rich to 39.6%. Combined with the existing investment income surtax, it means that the federal capital gains tax rate of rich investors will reach 43.4%.
The source said that the capital gains tax rate applicable to people with an annual income of no less than $1 million will be increased to 39.6%, far exceeding the current basic tax rate of 20%. Together with the 3.8% investment income tax rate to fund Obama's health care reform, the capital gains tax level is higher than the top grade of the salary tax rate.
After the news, the US stock market recorded its biggest decline in more than a month. The S & P 500 index closed down 0.9%, with an intraday decline of 1.2%. As of the close, the Dow fell 0.94%, the S & P 500 fell 0.92% and the NASDAQ fell 0.94%.
At the same time, the panic index, which measures the risk of stock market fluctuations, once soared to a new high since April. The sharp decline of the stock market will be conducive to the return of venture capital to safe haven gold.
Chris zaccarelli, chief investment officer of independent advisor alliance, said it would stimulate selling this year. The next few years may prevent selling to some extent, but it may also prevent buying because people will want to put their money elsewhere. The higher the tax, the less people are likely to participate in related transactions.
Chris O'Keefe, managing director of Logan capital management, said the initial impact would be people's decision to take profits now before the tax increase. People may lock in earnings early this year. Capital flows are likely to decline as people may be more reluctant to lock in profits and move into other assets. If such a high tax has to be paid, people's willingness to trade will decline.
Biden is expected to release the proposal next week, and part of the income from the tax increase will be used for social spending in the "American family plan".