Market Watch. Updates in the Biden administration. Fall of gold to 4 month lows.

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Market Watch review. 25.11.2020

In today's release, we’ll cover the following topics:

  • US and Eurozone business activity levels.
  • Climate King Kerry and other appointments on Biden's team.
  • Fall of gold to 4-month low.

Recently released PMI indices for November showed an increase in business activity in the United States to the highest in 5.5 years. At the same time, according to IHS Markit, business activity in the Euro zone reached its lowest level in six months.

For Europe, a bit of positivity may well add up during December 2020. First, now the incidence is slowly declining, so next month the restrictions should gradually decrease. This will support business activity, particularly in the services sector. Second, the ECB will increase its stimulus measures. If they are convincing enough, demand may start to recover.

In the United States, the situation is less obvious because it is impossible to predict the dynamics of the incidence. If the incidence does not start to grow aggressively and restrictive measures do not intensify, we expect an increase in business activity.

Time will tell what will happen to the indices, but we move on to the next topic.

My administration will 'look like America'. This is exactly what Joe Biden said about the new appointments. Biden is determined and insists that the States have never seen anything like this in terms of diversity of race, social status and sexual orientation.

Alejandro Mallorcas should become the Minister of Homeland Security under Biden. The head of national intelligence - Avril Haynes. The former ally of President Obama, Linda Thomas Greenfield, is preparing to become the US Permanent Representative to the UN. Former Secretary of State John Kerry will vigorously fight climate change. Anthony Blinken is running for the post of Secretary of State. The one who was one of the developers of the sanctions against Moscow. Now he aims to cooperate with those countries that are ready to act to please the United States.

If the forecasts of the American media also come true, according to which the former Deputy defense Minister for political Affairs Michelle Flornoy will be nominated for the post of head of the Pentagon, and the former Chairman of the us Federal reserve Janet Yellen will be nominated for the post of Finance Minister, then the new old team can be considered almost complete.

Gold is getting cheaper amid expectations of the imminent arrival of coronavirus vaccines and the Trump administration's decision to launch the transfer of power to Joe Biden.

Usually, gold is in demand during periods of political, economic and social turbulence, and the normalization of the situation does not benefit it. So it happened this time: the growing expectations of the imminent appearance of effective vaccines against coronavirus and the decision of the Trump administration to launch the process of transfer of power to Joe Biden reduced uncertainty and provoked a decline in the price of gold to a 4-month low.

In early August, gold soared to record highs of $ 2075 an ounce, after which it spent the next three and a half months consolidating in the $ 1850-2000 range. Recently, however, news of the high efficacy of coronavirus vaccines being developed by Pfizer, Moderna and AstraZeneca inspired investors with optimism about the imminent normalization of the situation and provoked capital outflows from gold-focused exchange-traded funds (ETFs).

Closely monitor the news background and be prepared for all the surprises of the market.

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