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Gold prices edged lower on Tuesday on concerns over a fresh U.S. coronavirus aid package, while a slightly weaker dollar and subdued treasury yields limited losses and investors kept a close eye on the Federal Reserve’s policy meeting.

·         Spot gold was down 0.2% to $1,851.26 per ounce at. U.S. gold futures settled down 0.2% at $1,850.90.

 

·         “There is no clarity on where fiscal spending is going, there is no full clarity of how the central bank is going to react ... these uncertainties are serving as a cap on gold,” said Bart Melek, head of commodity strategies at TD Securities.

 

However, the dollar slipped from a near one-week high, raising gold’s appeal for other currency holders.

 

“The U.S. dollar came off a little bit and that’s typically a supportive factor.”

 

·         U.S. President Joe Biden’s $1.9 trillion pandemic relief proposal faces hurdles as Republicans voiced concerns over the cost and lobbied for a smaller plan targeting vaccine distribution.

 

·         “If they do reach a deal it might be a watered down version to get it through Congress, so that’s also weighing on (the gold) market,” said Saxo Bank analyst Ole Hansen.

 

·         Investors now await the U.S. central bank’s policy statement due at the end of a two-day policy meeting on Wednesday.

 

Meanwhile, U.S. 10-year Treasury yields hit a near three-week low. Lower yields reduce the opportunity cost of holding non-yielding bullion.

 

·         On the physical front, China’s net gold imports via Hong Kong in December rose for a second straight month, although imports for the year plunged by 85% as the pandemic took its toll on the country’s demand for the metal.

 

·         Silver rose 0.7% to $25.48 an ounce, platinum lost 0.6% to $1,092.15, and palladium fell 0.7% to $2,317.83.

·         Dollar retreats as riskier currencies recover

The U.S. dollar edged lower across the board as traders showed a preference for riskier currencies on Tuesday, a day after worries over vaccine rollouts and the outlook for U.S. fiscal stimulus boosted demand for safe havens.

The U.S. Dollar Currency Index was 0.22% lower at 90.143. The index rose as high as 90.614, its strongest since Jan. 20, earlier in the session.

 

·         U.S. consumer confidence edges higher; house prices accelerate

U.S. consumer confidence rose moderately in January while lingering concerns about the COVID-19 pandemic led to a further deterioration in households’ perceptions of the labor market, raising the risk of a second straight month of job losses.

 

·         CORONAVIRUS UPDATES:

Global Cases: 100.80 (+517,516)
Global Deaths: 2.16M (+15,466)

 

No. 1

U.S. Cases: 26.00M (+143,808)
U.S. Deaths: 435,314 (+3,907)

 

No. 2 -6

India Cases: 10.69M (+12,569)

Brazil Cases: 8.93M (63,626)

Russia Cases: 3.75M (+18,241)

UK Cases: 3.68M (+20,089)

France Cases: 3.07 (+22,086)

 

Asian Updates:

No. 37

Japan Cases: 368,143 (+3,330)
Japan Deaths: 5,158 (+74)

 

No. 71

Myanmar Cases: 138,368 (+411)
Myanmar Deaths: 3,082 (+13)

 

No. 83

China Cases: 89,197 (+82)
China Deaths: 4,636 (+1)

 

No. 86

South Korea Cases: 75,875 (+354)
South Korea Deaths: 1,371 (+11)

 

No. 124

Thailand Cases: 14,646 (+959)
Thailand Deaths: 75

 

·         EU demands coronavirus vaccine makers honor commitments as supplies look uncertain

European Commission President Ursula von der Leyen on Tuesday called on coronavirus vaccine makers to deliver on their pledges to supply millions of doses to the bloc, and beyond.

 

·         Biden administration orders additional 200 million doses of Covid-19 vaccine

The Biden administration is purchasing an additional 200 million doses of the Covid-19 vaccine, a move that could provide enough doses for nearly every American to get fully inoculated by the end of the summer, a senior administration official said Tuesday.

The new purchase of 100 million doses from Pfizer and 100 million from Moderna will be made available over the summer and are in addition to the 400 million combined doses the companies had already committed to providing to the U.S., the official said.

 

·         Democrats may move forward on coronavirus aid without Republicans, says Schumer

Democrats in the U.S. Senate will move forward on U.S. President Joe Biden’s coronavirus relief plan without Republican support if necessary, Senate Democratic leader Chuck Schumer said on Tuesday.

 

·         In early action, Biden tries to make good on pledge to heal America's racial divide

 

·         Yellen, Rice tout economics as key to fixing American inequality

Dismantling racial inequalities that have plagued the United States since its founding will boost economic growth and create new jobs for everyone, top advisers to President Joe Biden said Tuesday, laying out a central tenet of the new administration’s agenda.

Biden’s top domestic policy adviser Susan Rice said there was clear evidence that fixing inequality was essential for the overall U.S. economy to thrive and prosper.

 

·         IMF more upbeat on global economy, but warns new Covid variants could derail growth

The International Monetary Fund has become more upbeat about the global economy, as coronavirus vaccinations are administered across the world. It is, however, worried about the risk new Covid variants pose to the post-pandemic recovery.

The global economy, helped in part by improved outlooks in the US and Japan, will recover from a 3.5% fall in GDP in 2020 with growth of 5.5% in 2021, up 0.3 percentage points compared with October’s forecast.

 “Much now depends on the outcome of this race between a mutating virus and vaccines to end the pandemic, and on the ability of policies to provide effective support until that happens,” the IMF’s Chief Economist Gita Gopinath said in a blog post.

 

·         Fed will need to reassure the market it’s not thinking about dialing back its support

Federal Reserve Chairman Jerome Powell has a few nerves to quell among market participants wondering when the central bank will start tapping the brakes on all the help it’s been providing.

The big buzzword surrounding the Fed now is “tapering.” It’s a reference to pulling back on the monthly bond purchases that have helped keep the financial system flush with cash and have encouraged investors to continue to take on risk despite stock market valuations that are their highest since at least the dot-com bubble of the early 21st century.

Markets figure that as long as the Fed keeps pumping, then it’s safe to keep buying.

 

·         Sen. Patrick Leahy, set to preside over Trump impeachment, taken to hospital

Sen. Patrick Leahy, the Vermont Democrat set to preside over the upcoming impeachment trial of former President Donald Trump, was taken to a Washington hospital for evaluation Tuesday, his spokesman said.

 

·         Microsoft reports 17% revenue growth as cloud business accelerates

Earnings: $2.03 per share, adjusted, vs. $1.64 per share as expected by analysts, according to Refinitiv.

Revenue: $43.08 billion, vs. $40.18 billion as expected by analysts, according to Refinitiv.

·         UK retailers report biggest annual price falls since May

British retailers reported the biggest annual fall in prices since May this month, adding to signs of pressure on the sector since non-essential stores had to close to the public from Jan. 5 as part of renewed COVID lockdown measures.

The British Retail Consortium, a trade body, said on Wednesday that its members saw average prices fall by 2.2% in January compared with a year earlier, the largest such fall since the depths of Britain’s first lockdown in May.

 

Reference: CNBC, Reuters, Worldometers