Gold range-bound as vaccine cheer offsets pandemic resurgence
· Gold inched down but held in a narrow range on Tuesday, as a weaker dollar and concerns about mounting coronavirus cases and their impact on the economy vied with optimism about the race to deliver a vaccine.
· Spot gold was down 0.2% at $1,884.91 per ounce by 01:47 p.m. EDT (1847 GMT).
· U.S. gold futures settled 0.1% lower at $1,885.10.
· "There is a lack of conviction on the trajectory of safe haven flows, we've all this vaccine optimism in place, but we also have the U.S. and Europe still struggling with the pandemic," said Edward Moya, senior market analyst at OANDA.
"Longer term trends are still supportive for gold to rally, but we're seeing some investors kind of abandon their bullish bets. The vaccine news for many has made holding gold longer term less appealing."
· Gold shed as much as 1.3% on Monday after Moderna said its vaccine was 94.5% effective in preventing COVID-19 in a late-stage trial, becoming the second U.S. drugmaker after Pfizer to report results that exceeded expectations.
Meanwhile, U.S. retail sales rose less than expected in October and could slow further amid rising infections and new restrictions.
Limiting gold's losses, the dollar eased 0.3% against rivals.
· "Gold is trapped in a range. It's limited on the upside, $1,900 is the key level of resistance, and $1,850 is key support," said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.
Gold will remain supported as "everyone believes that next year inflation will run hot and the U.S. Federal Reserve will not do anything about it," he added.
· Bullion, considered a hedge against inflation and currency debasement, has gained over 24% this year, mainly benefiting from massive global stimulus.
· Silver fell 0.8% to $24.54 per ounce. Platinum rose 0.4% to $929.33, while palladium shed 0.7% to $2,317.72.
· U.S. retail sales miss expectations in October
U.S. retail sales increased less than expected in October and could slow further, restrained by spiraling new COVID-19 infections and declining household income as millions of unemployed Americans lose government financial support.
Retail sales rose 0.3% last month, the Commerce Department said on Tuesday. Data for September was revised down to show sales surging 1.6% instead of shooting up 1.9% as previously reported. Economists polled by Reuters had forecast retail sales would gain 0.5% in October.
Excluding automobiles, gasoline, building materials and food services, retail sales nudged up 0.1% after a downwardly revised 0.9% increase in September. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. They were previously estimated to have risen 1.4% in September.
· CORONAVIRUS UPDATES:
Global cases: 55.92M
Global deaths: 1.34M
U.S. cases: 11.69M
U.S. deaths: 254,250
Daily new coronavirus cases have been exceeding 100,000 since early this month, pushing the number of infections in the United States above 11 million, according to a Reuters tally. Some state and local governments have imposed new restrictions on businesses.
· France becomes first European country to top 2 million COVID-19 cases: Reuters tally
Europe has reported nearly 14.5 million COVID-19 cases so far, making it the worst-affected region in the world and accounting for more than 26% of all infections so far, according to the tally.
· Canada could deliver a COVID-19 vaccine to most by end of 2021, says top health official
· J&J expects data for U.S. authorization of COVID-19 vaccine by February, says head scientist
“By the end of the year or around the end of the year, we should have 60,000 people in the study,” Dr. Paul Stoffels, J&J’s chief scientific officer, said in an interview ahead of this week’s Reuters Total Health conference.
“And efficacy endpoint should be there in the first few weeks or months, January or February, of the new year,” he added.
· Biden COVID-19 task force says transition delay could be compromising U.S. virus response
· McConnell open to $500 billion for coronavirus relief
U.S. Senate Majority Leader Mitch McConnell said on Tuesday he is open to a $500 billion package aimed at alleviating economic pain from the coronavirus pandemic, but the Republican added he has not had any private discussions with Democrats who control the House of Representatives or President-elect Joe Biden, also a Democrat.
· Fed's Powell signals emergency credit programs should be extended
Federal Reserve Chair Jerome Powell said on Tuesday it was not time to shut down emergency programs aimed at battling the economic fallout from the coronavirus pandemic, with cases again surging and the economy left with “a long way to go” to recover.
“I don’t think it is time yet, or very soon,” to shutter the suite of credit programs set up by the Fed last spring with the authorization of the Treasury Department and funding from Congress, Powell said in the clearest indication yet he feels the programs are likely needed beyond Dec. 31, when many are due to expire.
Extending the programs would require Treasury’s approval under the “lame-duck” Trump administration. Some Republicans in Congress have balked at keeping them open, particularly the program of lending for local governments.
But Powell and other Fed officials are concerned about how competing perceptions of where the economy stands may bog down debate over the proper policy response.
Even as recent positive news on experimental coronavirus vaccines has raised the prospect of a fuller economic recovery next year, the next few months could be “challenging” the Fed chief said at a virtual event hosted by the Bay Area Council in California.
· Fed's Bostic: U.S. faces short-run problems, medium-term hopes on vaccine: CNBC
Weak October retail sales point to short-term risks to the U.S. economy as coronavirus infections surge and families “get to the edge” of cash reserves set aside from now-expired government aid programs, Atlanta Fed President Raphael Bostic said on Tuesday.
“We have short-term and immediate-term concerns with the spike in the virus and what that is going to do in terms of businesses and the things that they are able to produce, in terms of consumers in terms of their willingness to go out and buy things. ... That is paired with some medium-term positive signs” that a possible vaccine could reinvigorate the economy next year, Bostic said in comments to CNBC.
“The vaccine is definitely positive news and it will definitely lead to a pretty robust recovery once it gets into the population deep enough,” Bostic said. But as the Fed’s Dec. 15-16 meeting approaches, “we are going to be paying really close attention to the numbers moving forward to see whether this weakness in retail sales translates into something more deep.”
Some investors expect the Fed at that meeting to change its bond buying program to provide more support to the economy in response to the renewed outbreak.
· U.S. travel spending will plunge in 2020, not fully recover until 2024: travel group
A U.S. travel group said on Tuesday that travel spending is expected to fall by more than $500 billion in 2020 and is not expected to recover to pre-coronavirus levels until 2024
The U.S. Travel Association projects spending in 2019 will be $617 billion, down from its July forecast of $622 billion, compared with $1.13 trillion in 2019.
The decline reflects the dramatic falloff in business travel. The group said the industry has lost nearly 40%, or 3.5 million, of all direct travel jobs and warned another 1 million jobs could be lost without additional government relief by year-end.
· Bill Gates says more than 50% of business travel will disappear in post-coronavirus world
The coronavirus will fundamentally alter the way people travel for and conduct business, even after the pandemic is over, Microsoft co-founder Bill Gates said Tuesday.
· Goldman Sachs plans second round of job cuts after pandemic-led pause: Bloomberg News
The report said the latest round of job cuts is not expected to exceed the roughly 400 positions the bank began eliminating in September.
· Full impact of pandemic on Europe’s banks won’t be clear until 2021, official says
The fallout from the coronavirus pandemic on Europe’s financial institutions will become more apparent in the coming months, according to a senior European banking official, and there could be one or two casualties in the sector.
Elke König, chair of the Single Resolution Board of the Single Resolution Mechanism, which oversees the restructuring of failing banks in the EU, said she expected a rise in the number of non-performing loans (NPLs) in the region, which in turn would hit bank balance sheets.
However, König highlighted that some government support implemented at the start of the coronavirus crisis was starting to expire, and as such, further damage to Europe’s banking sector could become apparent later in 2021.
· Hungary, Poland block 2021-2027 EU budget, recovery package
Hungary and Poland on Monday blocked the adoption of the 2021-2027 budget and recovery fund by European Union governments because the budget law included a clause that makes access to money conditional on respecting the rule of law.
The veto is likely to cause a delay in the launch of the 1.8 trillion euro package that combines the EU’s long-term budget and the bloc’s economic recovery plan, but is unlikely to derail it altogether, a senior French official said.
Ambassadors of EU countries on Monday accepted a deal struck with the European parliament which establishes a clear link between EU money and the respect for the rule of law. They agreed because this vote required only a qualified majority and the opposition of Warsaw and Budapest could not stop it.
But when it came to voting on the 1.1 trillion euro budget itself and the 750 billion euro ($888.23 billion) recovery package, which require unanimous support, “two EU member states expressed reservations” the German presidency of the EU said.
Without unanimous consent on the 1.8 trillion euro package, no EU country can get its money, giving Warsaw and Budapest strong leverage to pressure others to remove the link.
But a group of countries led by the Netherlands as well as the European Parliament wanted an even stronger link and have said they would not approve the budget without it.
“Denying the whole of Europe crisis funding in the worst crisis since decades is irresponsible,” Manfred Weber, who heads the biggest group in the European Parliament said on Twitter.
· BoE's Ramsden: Markets see roughly 20% chance of no UK-EU trade deal
Bank of England Deputy Governor Dave Ramsden said on Tuesday that financial markets are pricing around a roughly one-in-five chance that Britain and the EU will fail to strike a trade deal ahead of the Dec. 31 end of the Brexit transition period.
“At the moment, markets are probably pricing in about a 20%, maybe 20-30% chance of no-deal, so you might get some market disruption,” Ramsden said, answering questions from audience members following a speech to the University of Nottingham.
· Germany accuses Russia, China of stalling over North Korea fuel sanctions
Germany accused Russia and China on Tuesday of preventing a United Nations Security Council committee from determining whether North Korea has breached a U.N. cap on refined petroleum imports by the isolated Asian state.
· Trump says U.S. cybersecurity chief Chris Krebs has been terminated
Reference: CNBC, Reuters, Worldometers
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