Gold edges higher off 1-1/2 month low despite buoyant dollar
Gold prices edged higher on Monday on the prospect of extended U.S. fiscal stimulus and accommodative monetary policies, although bullion held close to the 1-1/2 month low hit earlier as the dollar extended gains.
Spot gold was up 0.3% to $1,831.49 per ounce by 1236 GMT, after falling to $1,809.90, its lowest since Dec. 2. U.S. gold futures were flat at $1,829.80.
· Hedge funds aggressively exit their bullish gold bets as U.S. dollar, bond yields rise
Hedge funds and gold investors have significantly cut back on their bullish gold exposure as the precious metal continues to be weighed down by a stronger U.S. dollar and rising bond yields, according to the latest data from the Commodity Futures Trading Commission (CFTC).
CFTC disaggregated Commitments of Traders report for the week ending Jan. 12 showed money managers decreased their speculative gross long positions in Comex gold futures by 36,039 contracts to 131,057. At the same time, short positions increased by 2,296 contracts to 52,823.
· "Gold saw a dramatic reduction in net longs after speculators were spooked by the surge in ten-year bond yields above 1% and a stronger dollar," said Ole Hansen, head of commodity strategy at Saxo Bank.
· Gold's net length now stands at 78,234 contracts, a drop of more than 36% from the previous week. Bullish best in gold have dropped to their lowest level since May 2019, according to the report.
· "ETF investors appear to be viewing the lower price as a good buying opportunity," said Carston Fritsch, precious metals analysts at Commerzbank. "According to Bloomberg, ETF holdings increased by nearly 17 tons on Friday. Almost the entire inflow was attributable to the SPDR Gold Trust, which is used chiefly by institutional investors."
Although investors have been aggressively fleeing the gold market, the silver market appears to be holding its own.
The disaggregated report showed money-managed speculative gross long positions in Comex silver futures fell by 3,485 contracts to 69,805. At the same time, short positions rose by 461 contracts to 27,861.
Silver's net length currently stands at 41,944 contracts, down 8.5% from the previous week. Silver's net length is at its lowest level since late-November.
During the survey period, silver prices were able to hold support above $25 an ounce.
· "This new (U.S.) government will provide more economic stimulus and also the policy of the U.S. Federal Reserve is unlikely to become more hawkish going forward," said Commerzbank analyst Eugen Weinberg.
"Therefore we are likely to see continued support for gold prices."
U.S. President-elect Joe Biden outlined a $1.9 trillion stimulus package proposal last week to jump-start the economy and accelerate the distribution of COVID-19 vaccines.
Fed Chair Jerome Powell also said there was no reason to alter the central bank's highly accommodative stance with the U.S. economy still far from its inflation and employment goals.
Gold is considered a hedge against inflation and currency debasement, likely to arise from large stimulus measures.
However, Commerzbank's Weinberg said a stronger dollar, economic optimism and concerns about Janet Yellen as the U.S. Treasury secretary nominee, who might be restrictive on the fiscal stimulus side, were weighing on gold prices.
The U.S. dollar hit a four-week peak against rival currencies, making gold expensive for holders of other currencies.
· Although U.S. inflation expectations have risen in anticipation of more U.S. fiscal stimulus, gold has not been the sole beneficiary - bond yields have risen and weighed on gold, Phillip Futures said in a note.
· U.S. Treasury yields scaled a 10-month high last week.
· Among other precious metals, silver gained 0.5% to $24.85 an ounce, while platinum was down 0.1% to $1,072.82 and palladium shed 0.1% to $2,380.71.
· Dollar reaches one-month highs as markets eye Biden's FX policy
The U.S. dollar strengthened for a third consecutive day on Monday, reaching a four-week high, as risk aversion swept through currency markets, knocking the Australian dollar and the British pound lower.
With U.S. markets shut for a holiday on Monday and Joe Biden set to be inaugurated as the next U.S. president on Wednesday, major currencies remained within established ranges, watching carefully the new administration’s stance on the currency.
· Yellen says U.S. must 'act big' on next coronavirus relief package
Janet Yellen, U.S. President-elect Joe Biden’s nominee to run the Treasury Department, will tell the Senate Finance Committee on Tuesday that the government must “act big” with its next coronavirus relief package.
· CORONAVIRUS UPDATES:
Global Cases: 95.97 (+455,095)
Global Deaths: 2.04M (+8,855)
No. 1
U.S. Cases: 24.61M (+130,742)
U.S. Deaths: 408,503 (+1,305)
No. 2 - 5
India Cases: 10.58M (+9,975)
Brazil Cases: 8.51M (24,139)
Russia Cases: 3.59M (+22,857)
UK Cases: 3.43M (+37,535)
No.6
France Cases: 2.91 (+3,736)
France Deaths: 70,686 (+403)
Asian Updates:
No. 39
Japan Cases: 328,294 (+5,998)
Japan Deaths: 4,501 (+55)
No. 70
Myanmar Cases: 134,795 (+477)
Myanmar Deaths: 2,973 (+18)
No. 83
China Cases: 88,336 (+109)
China Deaths: 4,635
No. 86
South Korea Cases: 72,729 (+389)
South Korea Deaths: 1,264 (+15)
No. 128
Thailand Cases: 12,423 (+369)
Thailand Deaths: 70
· France's daily new COVID-19 infections at a more than six-week high
France’s average daily number of new COVID-19 infections hit a six-and-a-half week high of 18,270 on Monday, while the number of people being treated in intensive care units for the disease rose above 2,800 for the first time in a month.
Unlike Britain or Germany, France’s government has so far stopped short of imposing a third national lockdown, but a nationwide curfew was moved earlier, to start at 6 p.m., on Saturday, and authorities say it will remain for at least a fortnight to slow the spread of the disease.
Prime Minister Jean Castex reaffirmed on France 5 television that a new confinement could be imposed if the situation worsened. Recent polls show that French overwhelmingly think such a measure will eventually be needed.
· Trump lifting COVID-19 travel restrictions on Europe, UK, Brazil - sources
U.S. President Donald Trump will rescind entry bans for most non-U.S. citizens who recently were in Brazil and much of Europe starting on Jan. 26, two officials briefed on the matter told Reuters on Monday.
· Euro zone pledges continued fiscal support against COVID, to work on recovery plans
Euro zone finance ministers pledged continued fiscal support for their economies on Monday and discussed the design of post-pandemic recovery plans as the European Commission warned the COVID crisis was making the bloc’s economic imbalances worse.
· World on the brink of ‘catastrophic moral failure’ due to unfair vaccine rollouts, WHO chief says
The head of the World Health Organization said Monday the equitable distribution of coronavirus vaccines is at “serious risk.”
Warning of a “catastrophic moral failure,” WHO’s Director-General Tedros Adhanom Ghebreyesus said “the recent emergence of rapidly-spreading variants makes the rapid and equitable rollout of vaccines all the more important.”
However, he added that “it’s not right that younger, healthier adults in rich countries are vaccinated before health workers and older people in poorer countries.”
“There will be enough vaccine for everybody, but right now we must work together as one global family to prioritize (those) most at risk of serious diseases and death in all countries.”
· IMF chief sees 'high degree of uncertainty' in global outlook
The head of the International Monetary Fund on Monday said the global lender needed more resources to help heavily indebted countries, citing a highly uncertain global economic outlook and a growing divergence between rich and poor countries.
IMF Managing Director Kristalina Georgieva, who has long advocated a new allocation of the IMF’s own currency, Special Drawing Rights (SDRs), said doing so now would give more funds to use address both the health and economic crisis, and accelerate moves to a digital and green economy.
· FBI investigating woman said to have stolen Pelosi’s laptop during Capitol riot to sell to Russia
· Biden team says won’t lift Europe, Brazil travel restrictions despite Trump order
The incoming Biden administration on Monday said it won’t lift a entry ban on most visitors from Europe, the U.K. and Brazil, shortly after President Donald Trump ordered an end to the Covid-19 travel restrictions.
· French central bank to exit coal, cap oil and gas investments
The French central bank said on Monday it would exit from coal and limit exposure to gas and oil in its investment portfolio by 2024 as part of a shift towards more environmentally friendly assets.
Many central banks have committed to green up their investment portfolios as part of a push to encourage the financial system to support a less environmentally damaging economy.
The Bank of France manages 22 billion euros ($26.6 billion) of its own portfolio investments separately from asset purchases related to its monetary policy operations.
· Oil companies, aid groups plan to press Biden to allow Venezuela fuel swaps
Representatives of fuel suppliers to Venezuela, importers of Venezuelan oil and advocacy groups said this month they plan to press the incoming administration of U.S. President-elect Joe Biden to reverse a ban on crude-for-diesel swaps.
· Oil slips on coronavirus fears, strong dollar
Oil prices fell slightly on Monday as a stronger dollar, fears over soaring COVID-19 cases around the world and the slow pace of vaccination against the coronavirus outweighed a better-than-expected quarterly rebound for China’s economy.
Brent crude was down 23 cents, or 0.4%, at $54.87 per barrel at 1720 GMT, and West Texas Intermediate U.S. crude fell 19 cents, or 0.4%, to $52.17.
· Outlook darkens for Wall Street as Biden's regulators take shape
Wall Street may be facing an uncomfortable four years after President-elect Joe Biden’s team confirmed on Monday it planned to nominate two consumer champions to lead top financial agencies, signaling a tougher stance on the industry than many had anticipated.
Gary Gensler will serve as chair of the Securities and Exchange Commission (SEC) and Federal Trade Commission member Rohit Chopra will head the Consumer Financial Protection Bureau (CFPB). Progressives see the agencies as critical to advancing policy priorities on climate change and social justice.
Wall Street-friendly Republicans on Monday criticized Biden for bowing to leftists, warning the picks would be divisive.
Reference: CNBC, Reuters, Worldometers
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