MTS Help Center

Gold tumbles 3% as Fed minutes lift dollar, Treasury yields

· Gold slumped more than 3% on Wednesday, as the dollar jumped and Treasury yields gained after the U.S. Federal Reserve’s July meeting minutes showed policymakers expressed little support to cap bond yields.

· Spot gold fell 3.4% to $1,932.09 per ounce by 4:21 p.m. EDT (2021 GMT), while U.S. gold futures settled 2.1% lower at $1,970.30.

· “One of the concerns was that the Fed was possibly going to adopt yield curve control, that would’ve been a strong catalyst for continued dollar weakness, but they said they are not considering it right now,” said Edward Moya, senior market analyst at broker OANDA.

“That would have been the most dovish outcome from the minutes, but we didn’t get that,” Moya added.

· Capping bond yields could diminish the attractiveness of U.S. Treasury debt and pressure the U.S. currency, boosting the non-yielding metal’s allure.

U.S. Treasury yields rose and the dollar jumped 0.8% after the minutes, ending a five-session slide to over a two-year low.

· The Fed reiterated the economic downturn triggered by the coronavirus pandemic faces a highly uncertain path and additional fiscal stimulus would needed to support the economy.

· “The expectation that the Fed would do something more has been the catalyst for the selling at this point,” said Jeffrey Sica, founder of Circle Squared Alternative Investments.

“They didn’t give any indication that they are going to create the amount of liquidity the gold investors were hoping for to get the price firmly above $2,000,” Sica added.

· Widespread stimulus measures and a low interest rate environment pushed gold prices to an all-time peak on Aug. 7, but bullion has pared gains since then.

· Gold was also pressured on Wednesday as a senior Trump administration official said a smaller coronavirus relief bill worth around $500 billion could be reached, as opposed to one between $1 trillion and $3 trillion that had been previously expected.

· Elsewhere, silver fell 3.7% to $26.61 per ounce. Platinum dropped 2.9% to $928.53 and palladium fell 1.5% to $2,154.55.

· Fed's Barkin says uncertainty is weighing on U.S. outlook

Uncertainty is weighing on the U.S. economic outlook, Richmond Federal Reserve Bank President Thomas Barkin warned on Wednesday, keeping households from spending, businesses from investing and even banks from extending credit.

To reduce that uncertainty, he said, at least two things are needed: better control of the coronavirus, and more government aid for the unemployed and for businesses.

· Kudlow says Trump wants to ‘deny China’ some of the proceeds of a TikTok sale

White House economic advisor Larry Kudlow told CNBC on Wednesday that President Donald Trump wants to prevent China from collecting some form of payment in a deal to sell TikTok.

“I think he probably would like to deny China some of the proceeds of the TikTok sale. It’s not something that’s been done in the past, but that doesn’t mean it can’t be done now,” the director of the National Economic Council said on “Closing Bell.”

· Turkey in talks with Germany, China, Russia on vaccine trials

Turkey is in talks with Russia, Germany and China about conducting Phase 3 trials for coronavirus vaccines developed in those countries, Health Minister Fahrettin Koca said on Wednesday.