The Fed's "big move" suspends liquidity crisis, precious metals rebound sharply

On Tuesday in New Zealand market, the precious metals rebounded sharply across the board. Spot gold once rose more than $ 85 from its daily low, refreshing its daily high to $1553.91/ounce; spot silver once rose more than 2%, rebounding from its daily low to more than US $1; palladium and platinum rebounded from daily lows by more than 16%.

As fallen for the past five consecutive days, precious medals have attracted a large number of low-buy buying orders; the Fed announced an increase in lending and the resumption of commercial ticket instruments during the financial crisis, alleviating market concerns about tight liquidity; however, the US dollar index rose 1.6% to a nearly one-month high, Limiting the rise in gold prices.

COMEX April gold futures closed up 39.30 US dollars, an increase of 2.6%, before the end of the trend of five consecutive trading days, reported at 1,525.80 US dollars / ounce. Bob Haberkorn, senior market strategist at RJO Futures, said that the Fed intervened to provide more liquidity news to the market to help gold prices rise, and gold is beginning to show its due trend.

Earlier, the Fed said it would restart short-term corporate bond purchase arrangements during the financial crisis to ease credit market tensions, which were affected by escalating public health emergencies, disrupting the daily lives of millions of Americans and potentially pushing the US economy into recession.

According to a statement released by the Federal Reserve on Tuesday, the Federal Reserve will use emergency powers to establish commercial paper financing instruments with the approval of the Treasury Secretary. The Treasury Department will use $ 10 billion from the Foreign Exchange Stability Fund for credit protection. The Fed will re-enable the tools used during the financial crisis to help U.S. companies raise capital in the commercial ticket market in the face of "huge pressure" on the commercial paper market due to coronavirus outbreak.

At the same time, the New York Fed will provide $ 1 trillion per day through overnight repo operations this week, and will provide $ 500 billion in overnight repo operations in the morning and afternoon, respectively.

It is reported that the total economic stimulus plan being discussed by the White House and US Treasury Secretary Mnuchin may reach a maximum of 1.2 trillion US dollars. US Treasury Secretary Mnuchin said that the stimulus package of about $ 1 trillion will include loans and direct checks; the stimulus package includes $ 300 billion in loans to small businesses, and $ 200 billion to maintain stability, including two rounds of $ 250 billion in checks to be issued.

Gold prices have fallen nearly 10% after hitting a seven-year high last week. It fell 5.1% on Monday, fell below the 200-day moving average and hit its lowest level since November 2019. Goldman Sachs analysts said in a report that the drop in oil prices has also depressed the price of gold, which has caused the Russian central bank to suspend the purchase of gold and may trigger some sell-offs; in the short term, the price of gold may remain volatile in search of a new equilibrium.

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