April 1st Market Update
Gold Rises to End Holiday-Shortened Week but Remains Range-Bound
Gold ended its first quarter at a loss, but as April begins it’s headed back up. Investors believe the metal’s price is still bound within a range, though. The dollar has weakened slightly due to Joe Biden’s new infrastructure plan and the inflation that may come as a result of government debt. Investors are looking for hedges and gold has regained some appeal. The yellow precious metal hit $1,733.72 by 9 a.m. EDT.
The container ship that had been blocking the Suez Canal was finally removed on Monday, allowing ships to travel the crucial trade route again. The Ever Given was re-floated by strong tides and heavy dredging. The blockage was responsible for roughly $400 million in losses per hour for global trade. Global investment banks suffered heavy losses due to their exposure to collapsing hedge fund Archegos. Amazon employees met in an attempt to unionize.
Treasury yields rose on Tuesday, pushing gold down. Bitcoin broke $58,000. The SEC summoned investment bank heads to answer for their exposure to Archegos Capital. The Archegos fallout expanded as JPMorgan told investors their losses would run between $5 billion and $10 billion. Some banks may be able to unwind their positions without the same losses, with Wells Fargo already making good on its exposure.
Joe Biden unveiled his spending plan for infrastructure on Wednesday. The plan revolves around tax hikes for corporations, with a 21% minimum tax on worldwide earnings and a 7% rise in U.S. corporate income tax. Biden noted he was “open to ideas” for funding. The plan is expected to be contentious in both houses of Congress. The SEC opened an investigation into Archegos head Bill Hwang.
Thursday saw more COVID-19 news as J&J dealt with a manufacturing error that affected 15 million doses. The province of Ontario went into lockdown again. Sweden and Germany stopped use of the AstraZeneca vaccine. OPEC+ is expected to unveil its production changes today, and oil markets jumped on talk that the trading bloc would keep limiting production.