Gold falls 1% as dollar accelerates rally
· Gold prices slumped more than 1% on Friday and the metal was heading for a second straight weekly drop as the dollar continued its upturn, overshadowing bullion’s appeal as an inflation hedge as the United States rolls out more stimulus.
· Spot gold was down 1% at $1,827.90 per ounce, having earlier declined as much as 1.3%, while U.S. gold futures settled down 1.2% at $1,829.90.
· Gold Price Analysis: XAU/USD sellers eye $1,800 despite recently mixed clues
Gold prices stays heavy near $1,820, recently dropped to $1,804, during the initial Asian session on Monday. The yellow metal declined heavily on Friday as the market’s risk-off mood favored the US dollar. However, a lack of major updates during the weekend and recently mixed catalysts trouble the yellow metal sellers off-late.
Technical analysis
A clear downside break of 200-day SMA can help gold sellers to conquer an ascending support line from March 2020, currently near $1,825. It should be noted that the last week’s top near $1,865 will challenge the commodity’s recovery moves past-200-day SMA level of $1,846.
· The dollar index was on track for its biggest weekly gain since October 2020, making bullion more expensive for holders of other currencies.
· “Bouts of dollar strength and the uptick in U.S. yields have triggered short-term corrections,” said Standard Chartered Analyst Suki Cooper. “The gold market is caught between longer-term buying on the back of rising inflation expectations given stimulus measures, but selling as the dollar has bounced and concern over QE tapering materialised.”
· Benchmark 10-year Treasury yields held close to near 10-month highs touched earlier in the week. ”
· The Biden administration should support a much more expansive spending agenda than before,” said Tai Wong, head of base and precious metals derivatives trading at BMO.
“But it seems like the stubborn short-term resilience of the dollar and concern for even higher yields is triggering steady liquidation in gold.”
· U.S. President-elect Joe Biden outlined a $1.9 trillion stimulus package proposal on Thursday. 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.
· On the technical front, gold has solid support around $1,775, and a dip to that level could trigger buying again, said Michael Matousek, head trader at U.S. Global Investors.
· Gold Price Analysis: XAU/USD downtrend holds as technicals turn bearish
Gold has retraced significantly after topping out at a nine-year high above $2,000 in August 2020. Recovery from the downtrend has proved to be an uphill battle for the bulls. Besides, the last two weeks have seen XAU/USD drop from the new yearly high at $1,950 to $1,825.
The pessimistic outlook has been validated after the precious metal dived under the ascending channel’s middle boundary. Intense overhead pressure is expected under the 200-day Simple Moving Average.
The moving average convergence divergence, or MACD, adds credence to the bearish narrative. This technical indicator, which follows the path of a trend and calculates its momentum, appears to be turning bearish on the daily chart. As the 12-day exponential moving average crossed under the 26-day exponential moving average, the odds for a bearish impulse increased significantly.
Gold may throw the bearish outlook out the window if support at $1,820 holds firmly. Moreover, closing the day above the 200 SMA would encourage buyers to increase their entries. If enough volume is created behind the precious metal, gold will embark on a recovery journey targeting $1,900.
· Silver fell 3.5% to $24.63 an ounce, having earlier dipped as much as 3.8%.
· Platinum dipped 3.9% to $1,074.63, having declined 4.4% earlier.
· Palladium shed 0.8% to $2,389.88.
· COVID-19 pressures U.S. retail sales; manufacturing shines
U.S. retail sales fell for a third straight month in December as renewed measures to slow the spread of COVID-19 triggered job losses, further evidence that the wounded economy lost considerable speed at the end of 2020.
The downturn in sales reported by the Commerce Department on Friday is, however, unlikely to push the economy back into recession, with other data showing production at factories accelerating last month. There is also cautious optimism that nearly $900 billion in additional pandemic relief provided by the government at the end of December will offer a backstop.
Retail sales dropped 0.7% last month. Data for November was revised down to show sales tumbling 1.4% instead of 1.1% as previously reported. Sales rose 2.9% on a year-on-year basis.
The monthly decline in sales was led by a 4.5% plunge at restaurants and bars after many authorities banned indoor dining over the holiday season. Online sales tumbled 5.8%. Receipts at electronics and appliance stores dropped 4.9%.
Consumers also cut back spending at sporting goods, hobby, musical instrument and book stores as well as beverage stores. That offset a 1.9% rebound in sales at auto dealerships and a 2.4% increase in receipts at clothing stores. There were also gains in sales at building material stores as well as health and personal care outlets.
Excluding automobiles, gasoline, building materials and food services, retail sales tumbled 1.9% last month after a downwardly revised 1.1% decline in November. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. They were previously estimated to have decreased 0.5% in November.
· Treasury nominee Janet Yellen to say U.S. does not seek weaker dollar -WSJ
Janet Yellen, President-elect Joe Biden’s pick to take over the U.S. Treasury, is expected to affirm the United States’ commitment to market-determined foreign exchange rates when she testifies on Capitol Hill on Tuesday, the Wall Street Journal reported on Sunday.
The Treasury secretary nominee will make clear at a Senate confirmation hearing that the United States does not seek a weaker dollar, the newspaper reported on.wsj.com, citing Biden transition officials familiar with her preparation for the session.
“The value of the U.S. dollar and other currencies should be determined by markets. Markets adjust to reflect variations in economic performance and generally facilitate adjustments in the global economy,” Yellen will say, if asked about the incoming administration’s dollar policy, according to the report.
“The United States doesn’t seek a weaker currency to gain competitive advantage,” she is prepared to say, according to the WSJ. “We should oppose attempts by other countries to do so.”
· Boston Fed’s Rosengren: Biden stimulus a big package but I think it’s appropriate
CNBC’s Steve Liesman talks to Boston Fed President Eric Rosengren, who believes President-elect Joe Biden’s economic stimulus plan is the appropriate action for this time.
“It’s a big package, but I think it’s appropriate,” he told CNBC’s Steve Liesman during an interview on “The Exchange.” “The economy is in a lull right now.”
Fed officials for months have been calling on Congress to provide more fiscal aid.
“While it’s a very big package, I do think until we get to the point where people have been vaccinated, where businesses have been bridged, and where many of the unemployed workers have come back to work, we need an expansionary fiscal policy,” Rosengren said. “And to the extent that it targets those parts of the economy most affected by the pandemic, that is the appropriate action for fiscal policy at this time.”
Though it’s uncertain how much spending Congress will approve, the money will go to an economy that Rosengren thinks will struggle through the first half of the year then rebound sharply.
Still, he said fiscal and monetary policy really isn’t the problem at this point, but rather that “we have the wrong pandemic policy.”
“Too many people are infected and we’re being too slow to get shots in the arm,” he said.
· Goldman Sachs raises US GDP forecast for 2021
More infectious strains of coronavirus spreading globally pose downside risk to economic recovery, says investment bank
Goldman Sachs revised up US economic growth forecast by 0.5 percentage points for 2021, as the Democratic blue wave makes it more likely to see a larger stimulus package adopted in the first quarter of the year.
The US' GDP is now expected to grow by 6.4% this year, up from the previous estimate of 5.9%, the American multinational investment bank and financial services company said in a report Thursday.
After Democrats have won the two Senate seats in Georgia runoff elections on Wednesday, giving them the control of the Congress, and Joe Biden winning the White House on Nov. 3 elections, they are "likely to pass further fiscal stimulus in the first quarter," the report said.
Goldman Sachs said it expects a relief package of around $750 billion, which would include $300 billion in stimulus checks for jobless Americans.
The investment firm also forecasts the US unemployment rate decreasing to 4.8% at the end of this year, to 4.3% at the end of 2022, and later to 3.9% and 3.6% for the end of 2023 and 2024, respectively.
· CORONAVIRUS UPDATES:
Global Cases: 95.452 (+518,676)
Global Deaths: 2.038M (+8,954)
No. 1
U.S. Cases: 24.47M (+167,492)
U.S. Deaths: 407,160 (+1,804)
No. 2 -6
India Cases: 10.57M (+13,962)
Brazil Cases: 8.48M (31,394)
Russia Cases: 3.56M (+23,586)
UK Cases: 3.39M (+38,598)
France Cases: 2.91 (+16,642)
Asian Updates:
No. 39
Japan Cases: 322,296 (+6,386)
Japan Deaths: 4,446 (+66)
No. 70
Myanmar Cases: 134,318 (+449)
Myanmar Deaths: 2,955 (+13)
No. 83
China Cases: 88,227 (+109)
China Deaths: 4,635
No. 86
South Korea Cases: 72,340 (+520)
South Korea Deaths: 1,249 (+13)
No. 127
Thailand Cases: 12,054 (+374)
Thailand Deaths: 70
· Biden to jumpstart federal vaccine push; UK strain could be dominant in U.S. by March
- San Francisco launches vaccine rollout plan
San Francisco Mayor London Breed announced a coronavirus rollout plan for her city which includes three large vaccination sites as well as community sites across the city.
“The first of these sites will be ready to go next week, as long as we receive a sufficient supply of vaccines from the state,” Breed said. “We will bring pop-up vaccine sites and mobile vaccine teams to increase availability to people living in high-impacted communities.”
- WHO says vaccines aren’t ‘silver bullets’ and relying entirely on them has hurt nations
Covid-19 vaccines aren’t “silver bullets” and relying solely on them to fight the pandemic has hurt nations, according to the World Health Organization.
“We warned in 2020 that if we were to rely entirely on vaccines as the only solution, we could lose the very controlled measures that we had at our disposal at the time. And I think to some extent that has come true,” Mike Ryan, executive director of the WHO’s health emergencies program, said at a news conference.
· New virus variant found in the U.K. could be dominant U.S. strain by March, CDC says
A more contagious strain of the coronavirus first found in the United Kingdom late last year, known as B.1.1.7, could become the dominant strain in the United States by March, according to a new study from the Centers for Disease Control and Prevention.
The virus’ increased transmission could add more stress on the nation’s hospitals and require “more rigorous” strategies to tamp down transmission until enough people are vaccinated, researchers said. Enhanced surveillance of the mutating viruses, combined with greater compliance with public health measures, like mask wearing, hand washing and physical distancing, along with faster vaccinations could dent the variant’s impact.
“These measures will be more effective if they are instituted sooner rather than later to slow the initial spread of the B.1.1.7 variant. Efforts to prepare the health care system for further surges in cases are warranted,” the researchers said.
· Britain tightens borders to keep out new Covid strains
Britain is tightening border controls to prevent new strains of Covid-19 coming into the country, suspending all the ‘travel corridor’ arrangements that had meant arrivals from some countries did not need to quarantine.
· Pfizer to temporarily reduce Covid vaccine deliveries to Europe
23 die in Norway after receiving Pfizer Covid-19 vaccine, 13 were nursing home patients apparently related to the side effects of the shots, New York Post reported citing the health officials.
All 13 were nursing home patients and at least 80 years old.
Norway’s health authority said in a statement released Friday that deliveries of the Pfizer-BioNTech vaccine would be reduced from next week “and for a period ahead.”
“We were predicted 43,875 vaccine doses from Pfizer in week 3. Now it seems that we get 36,075 doses,” NIPH said.
Pfizer said while changes to improve productivity would “temporarily impact shipments in late January to early February, it will provide a significant increase in doses available for patients in late February and March.”
· India starts world’s largest Covid-19 vaccination drive
Indian authorities hope to give shots to 300 million people, roughly the population of the U.S and several times more than its existing program that targets 26 million infants. The recipients include 30 million doctors, nurses and other front-line workers to be followed by 270 million others, who are either aged over 50 or have illnesses that make them vulnerable to COVID-19.
The first dose of a vaccine was administered to a health worker at All Indian Institute of Medical Sciences in the capital New Delhi, after Prime Minister Narendra Modi kickstarted the campaign with a nationally televised speech. Priority groups across the vast country, from the Himalayan mountains to the Andaman Islands in the Bay of Bengal, began receiving it shortly after.
· India’s friction with U.S. rises over planned purchase of Russian S-400 defense systems
The United States has told India it is unlikely to get a waiver on its planned acquisition of Russian S-400 air defense systems.
India says it needs the long-range surface-to-air missiles to counter the threat from China.
India and China have been locked in a face-off on the disputed Himalayan border since April, the most serious in decades.
India could face U.S. sanctions under a 2017 law if it goes through with the deal.
· China's economic recovery to quicken in fourth quarter, herald stronger 2021
China’s economic recovery likely accelerated in the fourth quarter, driven by stronger demand at home and abroad and policy stimulus which is expected to provide a solid boost into 2021.
The gross domestic product (GDP) numbers, due early on Monday, will be closely watched around the world, especia
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