Gold gains on dovish comments from Fed’s Powell
· Gold prices rose on Thursday after comments by U.S. Federal Reserve Chair Jerome Powell cemented hopes around a lower interest rate environment, while prospects of more U.S. stimulus further lifted bullion’s appeal as an inflation hedge.
· Spot gold rose as much as 0.8% following Powell’s comments and was up 0.3% at $1,848.22 per ounce. U.S. gold futures settled 0.2% lower at $1,851.40 per ounce.
· Powell said an interest rate hike is coming “no time soon” and pushed back against suggestions that the central bank might start tapering its bond purchases any time soon.
· “Powell pretty much confirmed the bank’s dovish stance. ... You’re going to see that the Fed is going to remain ultra-accommodative and that’s why gold prices are rising,” said Edward Moya, senior market analyst at OANDA.
· Lower interest rates decrease the opportunity cost of holding non-yielding bullion and weigh on the dollar.
“This significant jump is reminding everyone that the labor market situation is still dire, and it’s going to warrant more stimulus,” Moya said, adding that concerns over the coronavirus pandemic remained supportive for gold.
· In the wake of Powell comments, the dollar index edged lower, making gold cheaper for holders of other currencies. Meanwhile, the number of Americans filing first-time applications for unemployment benefits surged last week.
· U.S. President-elect Joe Biden is scheduled to unveil a stimulus package proposal on Thursday that could exceed $1.5 trillion.
· While gold is considered a hedge against the inflation and currency debasement that can result from widespread stimulus, a recent jump in bond yields has challenged that status as it increases the opportunity cost of holding non-yielding bullion.
· Treasury yields shot higher since the past week on expectations for the fresh stimulus and held close to 10-month highs.
· In other metals trading, silver gained 1.7% to $25.57 an ounce, platinum climbed 1.5% to $1,109.98 per ounce and palladium was up 0.3% at $2,391.08 per ounce.
· Powell: Focused on getting back to strong labor market
Federal Reserve Chairman Jerome Powell takes questions about the Fed’s new monetary framework, inflation expectations and more after a discussion at Princeton’s Bendheim Center for Finance.
· Powell sees no interest rate hikes on the horizon as long as inflation stays low
Federal Reserve Chairman Jerome Powell affirmed his commitment to keeping interest rates low for the foreseeable future even as he expressed hope for a strong economic recovery.
In its most recent policy statement, issued in December, the policymaking Federal Open Market Committee said it would keep an accommodative stance until it sees “substantial further progress” toward its employment and inflation goals.
On the employment mandate, Powell stressed the Fed’s new approach to inflation in which it will not raise rates even if unemployment falls below levels that historically would have been considered a warning sign for pricing pressures ahead.
“That wouldn’t be a reason to raise interest rates, unless we start to see inflation or other imbalances that would threaten the achievement of our mandate,” he said.
· Biden’s $1.9 trillion Covid relief plan calls for stimulus checks, unemployment support and more
President-elect Joe Biden on Thursday unveiled the details of a $1.9 trillion coronavirus rescue package designed to support households and businesses through the pandemic.
The proposal, called the American Rescue Plan, includes several familiar stimulus measures in the hope the additional fiscal support will sustain U.S. families and firms until the Covid-19 vaccine is widely available.
· Pelosi and Schumer pledge quick action on Biden stimulus package
· New York City's FY 2022 budget gap grows to $5.25 billion
A decline in property tax revenue related to the ongoing coronavirus pandemic has punched a bigger hole in the upcoming budget for New York City, which needs Democrats in control of the White House and the U.S. Congress to deliver major fiscal stimulus, Mayor Bill de Blasio said on Thursday.
The gap in the nearly $92.3 billion preliminary budget for the fiscal year that begins on July 1 grew to $5.25 billion from the city’s November financial plan projection of $3.75 billion.
· Second Trump impeachment trial takes U.S. into uncharted waters
· Moving day approaching at the Trump White House
Stacks of empty boxes were delivered to the White House grounds Wednesday while the clock continues to tick down for the Trump administration.
· US unemployment claims jump to 965,000 as virus takes toll
The number of people seeking unemployment aid soared last week to 965,000, the most since late August and a sign that the resurgent virus has likely escalated layoffs.
The latest figures for jobless claims, issued Thursday by the Labor Department, remain at levels never seen until the virus struck. Before the pandemic, weekly applications typically numbered around 225,000. They spiked to nearly 7 million last spring, after nationwide shutdowns took effect. Applications declined over the summer but have been stuck above 700,000 since September.
The high pace of layoffs coincides with an economy that has faltered as consumers have avoided traveling, shopping and eating out in the face of soaring viral caseloads. More than 4,300 deaths were reported Tuesday, another record high. Shutdowns of restaurants, bars and other venues where people gather in California, New York and other states have likely forced up layoffs.
Some states and cities are resisting shutdowns, partly out of fear of the economic consequences but raising the risk of further infections. Minnesota allowed in-person dining to resume this week. Michigan is poised to do the same. Some bars and restaurants in Kansas City are extending their hours.
Economists say that once coronavirus vaccines are more widely distributed, a broader recovery should take hold in the second half of the year. The incoming Biden administration, along with a now fully Democratic-led House and Senate, is also expected to push more rescue aid and spending measures that could accelerate growth.
Yet many analysts also worry that with millions of Americans still unemployed and as many as one in six small companies going out of business, people who have been hurt most by the downturn won't likely benefit from a recovery anytime soon.
· U.S.-China trade war has cost up to 245,000 U.S. jobs: business group study
· CORONAVIRUS UPDATES:
Global Cases: 93.49 (+737,897)
Global Deaths: 2.00M (+15,123)
U.S. Cases: 23.84M (+223,171)
U.S. Deaths: 397,821 (+3,896)
Brazil Cases: 8.32M (+68,656)
Brazil Deaths: 207,160 (+1,151)
India Cases: 10.52M (+15,515)
Russia Cases: 3.49M (+24,763)
UK Cases: 3.26M (+48,682)
Italy Cases: 2.33M (+17,246)
Spain Cases: 2.21M (+35,878)
ermany Cases: 2.00M (+22,931)
Asian Updates:
Japan Cases: 302,623 (+5,308)
Japan Deaths: 4,233 (+88)
China Cases: 87,844 (+138)
China Deaths: 4,635 (+1)
South Korea Cases: 70,728 (+524)
South Korea Deaths: 1,195 (+10)
Thailand Cases: 11,262 (+271)
Thailand Deaths: 69 (+2)
· Moderna looks to test Covid-19 booster shots a year after initial vaccination
Moderna plans to test a booster shot of its Covid-19 vaccine a year after the initial two-dose immunization, as the duration of protection from the new vaccines is still unclear.
· WHO Investigators Are Finally Allowed to Land in China in a Bid to Uncover the Origins of the Coronavirus Pandemic
· Two Members of W.H.O. Team on Trail of Virus Are Denied Entry to China
Beijing has repeatedly impeded the global inquiry into the emergence of the coronavirus. Two scientists on the team remained in Singapore after testing positive for antibodies.
· Italy plunges into political crisis — again
Italy is embroiled in fresh political uncertainty at a time when it’s still struggling with the coronavirus pandemic and the impact on its highly-indebted economy.
Critics have slammed what they call an “irresponsible” attitude by some political figures, who they believe are acting in their own personal interest.
“I am very worried about the situation,” was the stark warning from former leader Enrico Letta, speaking to CNBC on Thursday.
Matteo Renzi, another former prime minister, decided to pull his support for the current coalition government on Wednesday.
His small party had backed the Five Star Movement and the Democratic Party — two larger pro-EU groups — in an alliance that has been key in keeping anti-establishment right-wing parties away from power in Rome.
However, Renzi’s move challenges the slim majority the coalition has in Parliament, and raises several questions on how the impasse will be resolved.
· North Korea shows off new submarine-launched missiles after rare party congress
Reference: CNBC, Reuters, Worldometers, ABC NEWS
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