Gold rises but set for first monthly decline in five
· Gold prices rose on Monday as the U.S. dollar fell to a two-year low on a dovish policy shift by the U.S. Federal Reserve, although the metal was set for its first monthly decline in five.
· Spot gold gained 0.2% to $1,967.68 per ounce by 02:09 p.m. EDT (1809 GMT), after hitting its highest since Aug. 19 at $1,976.14.
· For the month, the metal was down 0.3%, having surged to an all-time peak of $2,072.49 on Aug. 7.
· U.S. gold futures settled up 0.2% at 1,978.60.
· "The weaker dollar and the anticipation that we are going to get further dollar weakness has led to some small increases (in gold)" said Jeffrey Sica, founder of Circle Squared Alternative Investments.
The dollar fell to an over two-year low, pressured by the Fed's latest average inflation target policy, which will allows rates to stay low even if inflation rises a bit in the future.
Low interest rates tend to support gold, which is a hedge against inflation and currency depreciation.
A gauge of global stocks was on track for a fifth straight month of gains.
"There is a significant concern that the (equities) market might have gotten extended and there might be some profit taking coming, which may lead to a rotation back to gold," Sica said.
· "At present there is less risk aversion in the global marketplace, which is somewhat constraining the safe-haven metal's bulls," Kitco Metals senior analyst Jim Wyckoff said in a note.
· Gold has gained about 29% this year, supported by economic uncertainty stemming from the pandemic as well as the upcoming U.S. elections.
· Elsewhere, silver jumped 2.7% to $28.23 an ounce, on track for a fifth monthly gain.
Platinum eased 0.3% to $928.36, while palladium rose 1.7% to $2,243.17. Both were set for their second straight monthly gain.
· CORONAVIRUS UPDATES:
Global cases: More than 25.62 million
Global deaths: At least 854,235
U.S. cases: More than 6.21 million
U.S. deaths: At least 187,721
Coronavirus cases are on the rise again across more than half of the U.S.
Coronavirus cases are rising across more than half of the nation even as the outbreak slows across former hotspots in Arizona, Florida, California and Texas.
New cases are up by at least 5%, based on a seven-day average, in 26 states as of Sunday, compared with just 12 states a week ago, according to a CNBC analysis of data compiled by Johns Hopkins University. In Arizona, Florida, California and Texas, new cases are declining by at least as much, though those states still accounted for nearly 10,000 new cases combined on Sunday — or about a fourth of all new U.S. cases.
Over the past seven days, an average of 5.7% of all tests processed each day came back positive as of Sunday, according to data from Hopkins. That’s down from 6.1% a week prior, Hopkins data shows. Epidemiologists often point to the percentage of positive tests as a good indicator of the status of an outbreak.
Brazil passes 3.9 million coronavirus cases, death toll at 121,381: health ministry
· WHO cautions against prematurely authorizing a vaccine
Dr. Soumya Swaminathan, the World Health Organization’s chief scientist, warned that authorizing a coronavirus vaccine too early and with too little data could create a variety of problems.
· Scientists see downsides to top COVID-19 vaccines from Russia, China
High-profile COVID-19 vaccines developed in Russia and China share a potential shortcoming: They are based on a common cold virus that many people have been exposed to, potentially limiting their effectiveness, some experts say.
CanSino Biologics’ (6185.HK) vaccine, approved for military use in China, is a modified form of adenovirus type 5, or Ad5. The company is in talks to get emergency approval in several countries before completing large-scale trials, the Wall Street Journal reported last week.
A vaccine developed by Moscow’s Gamaleya Institute, approved in Russia earlier this month despite limited testing, is based on Ad5 and a second less common adenovirus.
· EU offers 400 million euros to WHO-led COVID-19 vaccine initiative
The European Commission said on Monday that it would contribute to an initiative led by the World Health Organization to buy COVID-19 vaccines, while the WHO said Germany had joined the pact and that the agency was still negotiating with the bloc.
The Commission, announcing that it would provide 400 million euros ($478 million) in guarantees, did not clarify whether EU states would acquire shots through the WHO scheme.
· Invest COVID-19 aid funds selectively, says IMF chief
Governments need to invest aid funds more selectively to overcome the coronavirus crisis in the long term, International Monetary Fund Managing Director Kristalina Georgieva said.
They also need to make sure that public procurement is transparent and competitive so as to not lose the trust of citizens, Georgieva said at an Austrian economic forum, which she joined online.
· Fed to resume discussion of next policy steps, Clarida says
With a new policy framework in place, the Federal Reserve will turn to debating possible next steps in the U.S. central bank’s fight against the economic fallout of the coronavirus pandemic, Fed Vice Chair Richard Clarida said on Monday.
That discussion is expected to include possible promises by the Fed to link interest rate decisions directly to a return to full employment, and the possible expansion of its monthly asset purchases to further boost the economy.
· McConnell eyeing revamped U.S. coronavirus relief bill, Mnuchin tells Fox Business
The Trump administration and Senate Republicans have been in regular contact over possible coronavirus relief measures and the Senate’s top Republican will “hopefully” unveil a new bill next week, Treasury Secretary Steve Mnuchin said on Monday.
Asked about the collapse of talks with Democrats over aid legislation, Mnuchin told Fox Business Network that he and White House Chief of Staff Mark Meadows have been speaking regularly with Senate Republican leader Mitch McConnell.
“Hopefully Mitch will enter new legislation next week,” Mnuchin said.
· President Trump’s payroll tax holiday takes effect Sept. 1. What workers can expect
Workers participating in President Donald Trump’s payroll tax holiday may enjoy a bump in pay this fall, but their take-home pay could dip in early 2021.
Tuesday, Sept. 1 is the first day of Trump’s payroll tax deferral for employees, which he issued through an executive order in early August. The holiday applies until the end of 2020.
Workers and employers each share half the responsibility for a 12.4% tax that funds Social Security and a 2.9% that covers Medicare. The Social Security tax is subject to a wage threshold of $137,700 in 2020, but the Medicare tax is assessed over that threshold.
In particular, Trump’s executive order applies to the Social Security tax that’s paid by the employee, and it would apply to workers whose biweekly pay falls under $4,000 on a pretax basis.
· U.S. moves to curb steel imports from Mexico, Brazil
U.S. President Donald Trump’s administration took new steps to curb steel imports from Brazil and Mexico on Monday, boosting protections for battered U.S. steelmakers and jobs in the election battleground states of Pennsylvania, Ohio and Michigan.
The U.S. Trade Representative’s office said it was reducing Brazil’s remaining 2020 quota for semi-finished steel imports into the United States to 60,000 metric tons from 350,000 tons “in light of recent deterioration in market conditions brought on by the COVID-19 pandemic affecting domestic steel producers.”
USTR gave no details on how the monitoring regime would work, but said the arrangement will also maintain Mexico’s exemption from Section 232 steel duties.
· Brazil public sector debt rises to record 86.5% of GDP
Brazil’s finances continued to deteriorate in July as the COVID-19 crisis pushed the public sector debt and deficit as a share of the economy to new records, official figures showed on Monday, although not as badly as economists had feared.
The national debt rose to a record 86.5% of gross domestic product in July and the public sector primary deficit in the month, excluding interest payments, was 81.1 billion reais ($15 billion), the central bank said on Monday.
Both of these figures, however, were less than the respective forecasts in a Reuters poll of economists for 86.9% of GDP and a 94 billion reais monthly shortfall.
The primary deficit in the 12 months to July rose to 537 billion reais from 459 billion reais in June, the central bank said. As a share of GDP, it widened to 7.5% from 6.4% in June, and just 0.8% pre-coronavirus in February.
In the first seven months of the year, the primary deficit ran at 11.9% of GDP, compared with just 0.2% of GDP in the same period last year.
· Russia to cut rates in 2020, helping economy to grow in 2021: Reuters Poll
A mix of economic contraction and subdued inflationary risks will allow Russia to cut interest rates again this year, paving the way for a stronger rouble and an economic recovery in 2021, a poll of economists and analysts showed on Monday.
The consensus forecast of 21 analysts and economists suggested the central bank may lower its benchmark rate to 4% as soon as September although it may also opt to keep the rate at 4.25%.
· India's recovery to take time after economy shrinks 24% in June quarter
India’s economy shrank by nearly a quarter in April-June, much more than forecast and pointing to a longer than previously expected recovery with analysts calling for further stimulus.
Consumer spending, private investments and exports all collapsed during the world’s strictest lockdown imposed in late March to combat the COVID-19 pandemic and India - the world’s fastest-growing large economy until a few years ago - now looks to be headed for its first full-year contraction since 1980.
Gross domestic product shrank by a record 23.9% in April-June from a year earlier, official data showed on Monday, against a Reuters poll forecast for an 18.3% contraction.
Krishnamurthy Subramanian, chief economist at the Ministry of Finance, said India’s economy was set for a “V-shaped” recovery and should perform better in the coming quarters as indicated by a pickup in rail freight, power consumption and tax collections.
· Indian central bank announces new measures to maintain market stability
The Reserve Bank of India announced new measures on Monday to maintain stability in the financial system during the coronavirus pandemic, including two more tranches of special open market bond operations in its ‘Operation Twist’.
The central bank said it would also raise the ratio of securities that banks can hold until maturity within their statutory liquidity ratio (SLR) or mandatory bond holding requirement, which would help limit losses due to market volatility.
· Indian army says thwarts Chinese attempt to occupy hill on disputed border
Indian forces foiled an attempt by Chinese troops to occupy a hill on the Asian giants’ disputed border in the western Himalayas, officials in New Delhi said on Monday, following the latest flare-up between the two nuclear-armed neighbours.
· Japan July retail sales fall 2.8% year-on-year, government data shows
Japanese retail sales dropped 2.8% in July from a year earlier, compared with a median market forecast for a 1.7% decrease, government data showed on Monday.
· South Korea ready to boost policy support should virus outbreak worsen: vice finance minister
South Korea is ready to boost policy support to aid the economy hammered by the coronavirus should the rate of infection worsen significantly, its vice finance minister said on Tuesday.
“(Some) downturns are inevitable in the real economy due to the tightened preventive measures,” Kim Yong-beam said at a policy meeting, adding policies will be reinforced as needed.
Kim also said authorities stand ready to act to stabilize financial markets if needed, as a number of factors outside the COVID-19 outbreak including leadership changes in Japan and uncertainty in the United States could also increase market volatilities
Reference: CNBC, Reuters
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