Both gold and silver are showing moderate gains on the day. These gains are a direct result of dollar weakness and bullish market sentiment which stems from the renewed hope for a greatly needed fiscal stimulus. This has rekindled the belief that there will be a fiscal stimulus deal forthcoming. U.S. House Speaker Nancy Pelosi met with the Treasury Secretary Steve Mnuchin on Wednesday, and spoke on the phone every day last week. This in an effort to discuss a bipartisan aid package.
Last week the Congress passed a $2.2 trillion fiscal aid package, however as it stands many analysts believe that it will not likely be approved by the Senate. On Sunday Pelosi said that, “Progress was being made on a coronavirus relief package.” The California Democrat, appearing on CBS’s Face the Nation, indicated that she and White House negotiators were close to a deal, but blames Republicans for delays.
However according to CBSN Boston, “That progress, made between Pelosi and Treasury Secretary Steve Mnuchin, would still need to be approved by the GOP-controlled Senate in order to be signed into law. Senate Majority Leader Mitch McConnell suspended his chamber until October 19 after three Republican senators tested positive for COVID-19 in the wake of the president’s positive test. However, he has said that he could recall senators to hold a floor vote if a deal on a new economic package is made.”
According to the Washington Post, the fiscal stimulus bill could be completed by the end of this week. “Pelosi and Mnuchin revived bipartisan talks earlier this week and expressed optimism that an agreement could be reached. White House officials have in recent days privately expressed confidence that they could secure at least the outlines of a deal by the middle of next week, according to one person who spoke on the condition of anonymity to share details of private conversations.”
On Saturday afternoon President Trump tweeted from Walter Reed National Medical Center “OUR GREAT USA WANTS & NEEDS STIMULUS. WORK TOGETHER AND GET IT DONE. Thank you!”
Today’s gains in gold are almost split equally between bullish market sentiment and dollar weakness. This becomes greatly visible when we look at the KGX (Kitco Gold Index). According to the index spot gold gained $14.30 and is currently fixed at $1,913.10. On closer inspection dollar weakness accounted for a gain of $7.60, a little over half of today’s gains, with the remaining $6.70 attributed to bullish market sentiment.
Gold futures basis the most active December 2020 Comex contract gained $11 in trading today (+0.58 %), and is currently fixed at $1918.60. The U.S. dollar index lost (-0.45 %), which means that bullish sentiment for gold futures accounted for +0.13%. This is the highest closing price gold has traded to since September 22.
Silver futures basis the most active December 2020 Comex contract gained 2.04%, a $0.49 gain taking current futures pricing to $24.52.
Our technical studies indicate that there is moderate support for silver futures at $22.94 which corresponds to the 38% Fibonacci retracement. Major support for silver continues to be at its 100-day moving average which is currently fixed at $22.34. These studies also indicate that there is major support for gold at $1,860 which occurs at the 100-day moving average, and 38% Fibonacci retracement. The next level of resistance occurs at the key psychological level of $1,900 per ounce, with major resistance at the 50-day moving average in both gold and silver. For silver this average is currently fixed at $26.13 and for gold at $1,952.30.
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The Canadian Union of Public Employees says 128 Air Transat flight attendants — more than half the current workforce of attendants — were notified last week that they will be temporarily laid off and that the airline’s Vancouver base will be closed as a stop-gap measure.
CUPE says last week’s layoffs leave only 117 flight attendants working for the month of November, down from 245 flight attendants working in October, 355 in August and 2,000 before the COVID-19 pandemic.
Christophe Hennebelle, Transat AT’s vice president of human resources and corporate affairs, says that while no flight attendants have been permanently let go, the company is processing “a number of temporary layoffs.”
Hennebelle says the company cannot confirm total numbers before everyone has been informed, but that 128 flight attendants were told of the change last week.
In total, the airline says it now has about 1,700 active employees, down from 5,100 before the pandemic.
The airline attributed the decision to a lack of improving prospects for the industry amid Canada’s border closures and a dearth of support programs for airlines.
Business sentiment in Canada improved over the summer but remains near historical lows as uncertainty around the path of the virus curbs demand and sales prospects, according to the Bank of Canada.
The results from the autumn Business Outlook Survey show businesses report conditions have improved as warmer weather and lower Covid-19 case counts encouraged consumers to go out and buy goods and services. However, businesses are still worried about future demand and sales prospects with some economic restrictions still in place.
“Firms reported their sales prospects are limited by weak demand and precautionary health guidelines, and that their investment and hiring plans remain Modest due to elevated uncertainty,” the central bank said in the survey, which took place between Aug. 24 and Sept. 16.
The tone of the survey is consistent with the Bank of Canada’s view that a full recovery will be long and difficult. The economy rebounded more quickly than expected in the summer as containment measures were lifted but the second phase of the recovery — known as the “recuperation” phase — will be uneven and protracted.
The composite gauge of sentiment rose to -2.2 in the third quarter, from a decade-low of -6.9 last quarter. While that’s a substantial improvement, the reading is still the second-lowest since 2016.
Although the survey was completed recently, economic conditions have changed as Covid-19 cases rapidly rose, particularly in the country’s two largest provinces. Ontario and Quebec reimposed containment measures on some businesses and activity in recent weeks in response to the second wave which will keep a lid on demand and hamper economic activity through the fall and winter.
Recovery remains uneven across industries: One third of firms reported sales were mostly unaffected or positively affected by COVID‑19; a second third of firms indicated sales have already fully recovered or will recover within the next 12 months; final third either expect their sales won’t return for at least 12 months or are unsure when sales will fully rebound
Businesses that say sales won’t recover within a year typically linked to tourism and related industries where physical distancing is difficult
Meanwhile, businesses linked to real estate, infrastructure and natural resources have largely recovered or see themselves recovering within a year
Capacity constraints appear to be back to historical averages, but the central bank says most firms facing constraints see them as temporary or not broad-based
Despite the rebound in the capacity gauge, BOC concludes: “Results for capacity and labor pressures suggest that the economy continues to have excess capacity and labor slack, although these have narrowed since the summer survey”
Investment intentions improved from previous quarter, but remain weak — below historical averages
Employment intentions have also rebounded, though they remain slightly below historical averages. It’s an uneven trend. “Almost one-third of businesses — generally those that are dependent on tourism or facing weak demand — expect their workforce levels to remain lower than before the pandemic for at least the next 12 months or to never fully return”
Wage growth is expected to slow, the survey found
Firms expect input prices to grow at a slightly faster pace over the next 12 months, driven by increases in commodity prices, difficulty sourcing inputs, or higher operating costs due to health guidelines
Businesses have slightly higher inflation expectations, with 11 per cent of firms expecting inflation above 3 per cent
Oil prices were slightly down early on Monday as an OPEC+ panel is meeting virtually to discuss the latest supply and demand developments, while underwhelming economic data from China and stricter measures to fight COVID-19 in Europe weighed on oil market sentiment.
As of 08:32 a.m. EDT on Monday, WTI Crude was down 0.20 percent at $40.78 and Brent Crude traded down 0.26 percent on the day at $42.81.
Prices held relatively steady in the morning as investors await the outcome of the monthly meeting of the Joint Ministerial Monitoring Committee (JMMC) at which several OPEC+ ministers are discussing the latest market developments amid speculation whether the group should proceed with easing the cuts as of January, considering that the second COVID-19 wave sweeping through Europe and threatening to derail economic and oil demand recovery. The JMMC panel is not expected to take any action, but comments during and after the meeting could swing oil prices in either direction.
“Given the JMMC is made up of just a handful of OPEC+ members, we will likely have to wait for the full group meetings on the 30 November and 1 December for any concrete decision, though that does not mean that there won’t be plenty of noise around what OPEC+ might do,” ING strategists Warren Patterson and Wenyu Yao said on Monday.
Economic data out of China was not constructive for oil prices today, as economic growth in the third quarter—while accelerating from Q2—missed analyst expectations.
“With prices stuck in the low $40’s and global coronavirus cases spiking again, the group – despite Russian wishes to increase production – needs to tread carefully. The potential for a U.S. relief package remains alive, but the impact, given rising coronavirus cases, may be limited. Brent is currently stuck in a $41.50/b to $43.50/b range,” John Hardy, Head of FX Strategy at Saxo Bank, said on Monday.
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