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Gold rises as equities slip further, but faces monthly decline

· Gold and silver rose on Friday as an ongoing retail versus hedge fund faceoff and doubts over European vaccine supply hurt global stocks, but a resilient dollar took away some of bullion’s allure and kept it on track for its worst January in a decade.

· Spot gold rose 0.6% to $1,851.01 an ounce. U.S. gold futures settled up 0.5% to $1,850.30.

· A Wall Street retail frenzy this week weighed on equities, with a row in Europe over COVID-19 vaccine supply also hitting risk appetite.

· “We’re seeing some volatility in the equity market ... and vaccine rollouts are slower than expected. So gold is holding quite well at these levels,” said Bank of China International analyst Xiao Fu.

· But gold was down 2.5% so far this month, which would be its worst January since 2011, weighed down by a firm dollar amid an uptick in U.S. Treasury yields.

· Silver jumped 2.5% at $27.04 an ounce, extending gains from an as much as 7% spike on Thursday after some traders moved to cover short positions on rumors about a GameStop-style squeeze driven by retail investors.

· The retail frenzy around silver can repeat again, “because the market is small and doesn’t need much money,” said Julius Baer analyst Carsten Menke.

But “such an investment-driven rally lasts as long as people put money into the market. As soon as the flow of money fades, there’s nothing more that feeds this rally and prices come crashing down.”

· Platinum rose 0.4% to $1,074.67, while palladium fell 4.6% to $2,227.25.

· Silver futures jump 7% as Reddit traders try their squeeze play with the metal

Futures contracts for silver surged higher on Sunday night as the Reddit-fueled boom in highly shorted stocks appears to be spilling over into the metals market.

Silver futures were up 8% shortly after the futures market opened, marking the biggest move in the futures since at least 2013. The contracts last traded up 6.8%.

The sharp move higher builds off gains for silver and silver-related equities late last week. Silver mining stocks Coeur Mining and Pan American Silver rose 16.9% and 14.7%, respectively, on Thursday and Friday. The iShares Silver Trust jumped 6.7% during those two sessions.

The spike in demand for silver appears to be related to retail traders in the Reddit forum WallStreetBets, which has helped drive trading activity in heavily shorted stocks like GameStop and AMC Entertainment in recent weeks.

The forum had multiple active threads dedicated to silver on Sunday night. The phrase ”#silversqueeze” was also trending on Twitter.

The move in silver was touted by investors who are bullish on cryptocurrencies like Bitcoin, which see the new digital assets in part as replacements for traditional metals.

· CORONAVIRUS UPDATES:

Global Cases: 103.50 (+385,888)
Global Deaths: 2.23M (+9,063)

No. 1

U.S. Cases: 26.76M (+104,062)
U.S. Deaths: 452,225 (+1,832)

No. 2 -6

India Cases: 10.75M (+11,528)

Brazil Cases: 9.20M (27,756)

Russia Cases: 3.85M (+18,359)

UK Cases: 3.81M (+21,088)

France Cases: 3.19 (+19,235)

Asian Updates:

No. 37

Japan Cases: 386,742 (+3,659)

Japan Deaths: 5,654 (+108)

No. 71

Myanmar Cases: 140,145 (+281)
Myanmar Deaths: 3,131 (+6)

No. 83

China Cases: 89,522 (+92)
China Deaths: 4,636

No. 86

South Korea Cases: 78,205 (+355)
South Korea Deaths: 1,420 (+6)

No. 117

Thailand Cases: 18,782 (+829)
Thailand Deaths: 77

· New trial results from Johnson & Johnson’s coronavirus vaccine disappointed

J&J said its one-dose vaccine demonstrated 66% effectiveness overall in protecting against Covid-19. The vaccine was 72% effective in the United States, 66% in Latin America and 57% in South Africa after four weeks, the company said. The vaccine however offered complete protection against Covid-related hospitalizations. Shares of JNJ dropped 3.6%.

· Maryland confirms case of South African Covid variant that’s more infectious

Maryland has reported a case of the new, highly transmissible Covid-19 variant first found in South Africa, marking the third case to be detected in the U.S., Gov. Larry Hogan announced on Saturday.

The case involves an adult resident living in the Baltimore region with no history of international travel, Maryland health officials and the U.S. Centers for Disease Control and Prevention have confirmed.

· Israel extends lockdown, sees delay in COVID-19 turnaround

· EU's Von der Leyen says AstraZeneca will deliver 9 million more vaccine doses

AstraZeneca will deliver nine million more doses of its COVID-19 vaccine to the European Union in the first quarter of this year, making a total of 40 million for the period, and will start deliveries one week earlier than expected, the president of the European Commission said on Sunday.

· After outcry, EU reverses plan to restrict vaccine exports through Irish border

The European Union on Friday abruptly reversed a plan to use emergency Brexit measures to restrict exports of Covid-19 vaccines from crossing the Irish border into the United Kingdom after it sent shockwaves through Northern Ireland, London and Dublin.

In a steep escalation of the EU’s fight to secure vaccine supplies, Brussels had said it would trigger clauses in the Northern Irish Protocol to prevent the vaccines from moving across the open border between EU-member Ireland and the British-run province.

· UK confident of COVID vaccinations after securing EU guarantees

· British government working on COVID recovery plan for economy, says source

· German military to send medical staff and equipment to Portugal

Portugal, which said on Saturday that only seven of 850 ICU beds set up for COVID-19 cases on its mainland were vacant, had asked the German government for help.

· Hungarians protest against lockdown measures despite gathering ban

· China's factory recovery slows in January as COVID-19 returns

China’s factory activity grew at the slowest pace in five months in January, hit by a wave of domestic coronavirus infections, but still in line with the ongoing recovery in the world’s second-largest economy.

The official manufacturing Purchasing Manager’s Index (PMI) fell to 51.3 in January from 51.9 in December, the National Bureau of Statistics said in a statement on Sunday.

It remained above the 50-point mark that separates growth from contraction on a monthly basis, but was below the 51.6 expected in a Reuters poll of analyst forecasts.

· ECB's Lane says stocks, bank bonds not in toolbox: paper

· ECB's Knot: stock market rally could be fuelled by recovery hopes

The continuing rise of stock markets worldwide could be the result of growing hopes of economic recovery, and does not necessarily mean that prices are overly inflated, European Central Bank governing council member Klaas Knot said on Sunday.

· Rate hike would be devastating: ECB's Schnabel

· India might ban private cryptocurrencies like bitcoin and develop a national digital coin

India’s government plans to introduce a bill in the country’s lower house that would ban private cryptocurrencies such as bitcoin and create a national cryptocurrency.

The so-called “Cryptocurrency and Regulation of Official Digital Currency Bill” moves “to create a facilitative framework for creation of the official digital currency to be issued by the Reserve Bank of India.”

Additionally, “the bill also seeks to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses.”

· U.S. top diplomat condemns ‘harsh’ crackdown on Russian protests, renews call for Putin critic’s release

· Dow futures drop 270 points, building on losses after worst week since October

U.S. stock index futures declined in overnight trading as a surge in speculative trading by retail traders continued to cause hedge funds to take off risk and worried investors about a market bubble. The losses build on last week’s decline, which was the worst for the market since October.

Futures contracts tied to the Dow Jones Industrial Average declined 270 points, indicating a 271-point loss at the opening bell. S&P 500 futures slipped 1%, while Nasdaq 100 futures fell 1.2%.

· Melvin Capital, hedge fund that bet against GameStop, lost more than 50% in January

· Robinhood is still severely limiting trading, customers can only buy one share of GameStop

· Goldman sees hedge fund exposures close to records, ongoing sell-off risk after GameStop swings

· Taiwan says Chinese fighters, U.S. aircraft both entered defence zone

Six Chinese fighter aircraft and a U.S. reconnaissance aircraft entered the southwestern corner of Taiwan’s air defence identification zone on Sunday, the island’s defence ministry said, in an unusual admission of U.S. military activity.

Reference: CNBC, Reuters, Worldometers