Gold jumps 1.5% on inflation concerns, softer dollar
· Gold rose more than 1.5% to a near one-week high on Monday, as expectations for rising inflation triggered equity valuation concerns and drove investors toward the safe-haven metal, while a weaker U.S. dollar lent further support.
· Spot gold was up 1.5% at $1,808.16 an ounce by 1:46 p.m. EST, after hitting its highest level since Feb. 16 in the session.
· U.S. gold futures settled up 1.7% at $1,808.40.
· “We are seeing investment flows into gold as market participants grow more anxious about rising real rates that can impact equity valuations,” said TD Securities commodity strategist Daniel Ghali, pointing to rising Treasury yields.
· U.S. benchmark 10-year treasury yields hit a near one-year high, increasing the opportunity cost of holding non-yielding bullion.
However, rising real yields and inflation concerns made equity valuations look more stretched in comparison and prompted investors toward safe-haven assets like gold, which is widely viewed as a hedge against inflation.
· “The dollar at the moment is low and that is supporting. Also, the real reason for the gold prices to increase in the longer term is the chances of inflation picking up,” Commerzbank analyst Eugen Weinberg said.
· The dollar index fell 0.4% to a more than one-month low, making gold less expensive for holders of other currencies.
· A $1.9 trillion U.S. stimulus package is widely expected to pass by the end of the week, raising hopes of a speedy economic recovery but at the cost of rising inflation.
· Investors are also eyeing the testimony of U.S. Federal Reserve Chairman Jerome Powell on the Semiannual Monetary Report to Congress on Tuesday.
· The Fed and other leading central banks have pinned their hopes on ultra-low interest rates to get the economy out of the economic fallout from the COVID-19 pandemic.
· Elsewhere, silver rose 3% to $28.02 an ounce, its highest level since Feb.2. Platinum edged 0.1% higher to $1,274.80.
· Palladium gained 0.4% to $2,388.70, after reaching a more than one-month high of $2,431.50.
· U.S. House budget panel approves $1.9 trillion COVID-19 aid bill
The U.S. House of Representatives Budget Committee on Monday approved legislation with $1.9 trillion in new coronavirus relief, advancing a top priority of President Joe Biden toward a full House vote on passage expected later this week.
· Yellen sounds warning about ‘extremely inefficient’ bitcoin
Treasury Secretary Janet Yellen issued a warning Monday about the dangers that bitcoin poses both to investors and the public.
Despite a sharp slide in price to start the week, the cryptocurrency continues to trade above $53,000 as it has received boosts from various sources. Elon Musk’s Tesla recently made a substantial purchase and has said it will accept bitcoin for transactions.
However, Yellen said there remain important questions about legitimacy and stability.
· The market is getting nervous about Powell’s testimony this week
- Federal Reserve Chairman Jerome Powell speaks twice to Congress this week as part of mandated semiannual testimony.
- Normally nonevents for the market, the central bank leader’s comments will be viewed closely this week for how he views this year’s run-up in bond yields.
- Investors worry that too quick of a rise might force the Fed to tighten policy too quickly, while a complacent Fed also would pose overheating risks.
All eyes will be on Federal Reserve Chairman Jerome Powell, who delivers his semi-annual testimony on the economy before the Senate Banking Committee on Tuesday. His comments on rates and inflation could determine the market direction for the week.
· On Monday, European Central Bank President Christine Lagarde said in a speech that the central bank is “closely monitoring the evolution of long-term nominal bond yields.” European sovereign bonds yields moved lower in response to her remarks.
· Many on Wall Street still believe that the jump in bond yields reflects a sign of growing confidence in the economic recovery and stocks should be able to absorb higher rates amid strong earnings.
· CORONAVIRUS UPDATES:
Global Cases: 112.24 (+278,942)
Global Deaths: 2.48M (+6,365)
No.1-3
U.S. Cases: 28.82M (+54,816)
U.S. Deaths: 512,466(+1,249)
India Cases: 11.01M (+10,792)
India Deaths: 156,498(+80)
Brazil Cases: 10.19M (+29,357)
Brazil Deaths: 247,276 (+716)
No.114
Thailand Cases: 25,504 (+89)
Thailand Deaths: 83
· Fauci says U.S. political divisions contributed to 500,000 dead from COVID-19
· Covid vaccine shipments delayed by storm to be delivered by midweek, White House advisor says
· Australia on Monday began its mass COVID-19 vaccine programme as the country looked set to report no local cases for the third straight day, which gave the Aussie a boost.
· UK’s Boris Johnson reveals plan to exit lockdown restrictions by June
Schools in England will reopen on March 8, while recreation in outdoor public places like parks will also be allowed between two people.
By June 21, the government hopes to abolish all legal limits on mixing and to reopen the last sectors to remain closed, such as nightclubs.
The UK is set to announce how it will exit lockdown
U.K. Prime Minister Boris Johnson is set to announce Monday how and when lockdown restrictions will start to be lifted in England.
Government ministers are expected to discuss details of the “roadmap” for cautiously easing lockdown Monday morning. The prime minister will then outline the proposals to parliament later this afternoon, before giving a televised press conference in the evening.
Johnson is expected to set out the latest data on infection rates, hospitalizations and deaths, as well as early data showing the efficacy of coronavirus vaccines.
He is also expected to confirm that schools in England will reopen on March 8, and reveal more details on other restrictions set to be lifted.
The government said in a statement that the lifting of the country’s third lockdown, in place since early January, “will seek to balance health, economic and social factors with the very latest epidemiological data and advice.”
Data, not dates
Johnson has repeatedly said that the relaxation of measures will be cautious and driven by “data, not dates.” However, he has also said he wants the lifting of restrictions to be “irreversible” as he comes under pressure from members of his Conservative Party to re-open the economy.
· BoE's Vlieghe doubts he will ever see rates back at 5%
Bank of England policymaker Gertjan Vlieghe said on Monday that he did not expect British interest rates to return to levels common before the 2008 financial crisis during his lifetime, due partly to the effect of an ageing population.
· No risk of overheating in euro zone - ECB's Villeroy de Galhau
There is no risk of overheating in the euro zone economy and no risk of a lasting pick up of inflation, European Central Bank policymaker François Villeroy de Galhau said on Monday.
· China calls for a reset, but U.S. says Beijing trying to 'avert blame'
Senior Chinese diplomat Wang Yi said on Monday the United States and China could work together on various issues if they repaired their damaged bilateral relations, but Washington accused Beijing of trying to avert blame for its actions.
Wang, a Chinese state councillor and foreign minister, said Beijing stood ready to reopen constructive dialogue after ties sank to their lowest in decades under former president Donald Trump.
But he urged Washington to respect China’s core interests, stop “smearing” the ruling Communist Party, stop interfering in Beijing’s internal affairs, and stop “conniving” with separatist forces for Taiwan’s independence.
He called on the United States to remove tariffs on Chinese goods and abandon what he said was an irrational suppression of the Chinese tech sector.
In response, State Department spokesman Ned Price told reporters: “His comments reflect a continued pattern of Beijing’s tendency to avert blame for its predatory economic practices, its lack of transparency, its failure to honour its international agreements, and its repression of universal human rights.”
· Khamenei says Iran may enrich uranium to 60% purity if needed
Supreme Leader Ayatollah Ali Khamenei said on Monday Iran might enrich uranium up to 60% purity if the country needed it and would never yield to U.S. pressure over its nuclear programme, state television reported.
Iran’s 2015 nuclear deal with six powers, which it has been breaching since the United States withdrew in 2018, caps the fissile purity to which Tehran can refine uranium at 3.67%, well under the 20% achieved before the agreement and far below the 90% suitable for a nuclear weapon.
“Iran’s uranium enrichment level will not be limited to 20%. We will increase it to whatever level the country needs ... We may increase it to 60%,” the TV quoted Khamenei as saying, upping the ante in a stand-off with U.S. President Joe Biden’s administration over the future of the fraying deal.
· U.S. may take more action on Myanmar after crackdown on protests, says State Department spokesman
Reference: CNBC, Reuters, Worldometers
Thai
Eng