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Gold slumps as rising U.S. yields, dollar dull lusters

·         Gold tumbled 3% to an eight-month low on Friday en route to its worst month since November 2016 as a stronger dollar and elevated U.S. Treasury yields hammered non-yielding bullion’s appeal.

·         Spot gold was down 2.5% at $1,726.31 per ounce, after touching $1,716.85, its lowest since June 2020. Bullion is down 6.4% so far this month.

·         U.S. gold futures settled 2.6% lower at $1,728.80.

·         “Gold is struggling due to what’s going on in the bond market,” said Bob Haberkorn, senior market strategist at RJO Futures, adding ”(but) gold prices at these levels look like a great buy.”

 

·         U.S. 10-year Treasury yields held near their highest in over a year, while the dollar index also jumped. Rising inflation expectations have lifted U.S. Treasury yields more than 70 basis points so far this year, eroding gold’s status as an inflation hedge since that translates into a relatively higher opportunity cost of holding the metal.

 

·         “Gold is in trouble once more and the near-term outlook isn’t looking great for the yellow metal,” OANDA analyst Craig Erlam said in a note.

“Rising yields and now a jump in the dollar are piling the pressure on gold and, barring a reversal in bond markets, it’s tough to envisage its fortunes improving.”

 

·         Meanwhile, data showed U.S. consumer spending increased by the most in seven months in January. But while these economic numbers do take away some safe-haven buying “the trillions (in stimulus) that have been printed have to get into the system and interest rates are expected to stay low, which should help gold and silver down the road,” RJO Futures’ Haberkorn said.

·         Silver fell 3.1% to $26.56 an ounce and was poised for its first monthly decline in three, down 1.9% so far.

·         Palladium declined 2.4% at $2,343.11, while platinum fell 2% to $1,191.60. However, both the auto catalyst metals were on track for a monthly gain.

 

·         ‘This bond market is so radically oversold,’ economist David Rosenberg says

The 10-year yield ended the week at 1.41%. It’s now up 55% so far this year and is around 52-week highs. The yield moves inversely to debt prices.

 

·         GDP forecasts are higher than expected, driving growth and rates

Jeff Sherman from DoubleLine Capital and David Zervos from Jefferies join ‘Closing Bell’ to explain what they’re seeing in the markets as bond yields rise and stocks fall. Zervos said his advice for investors is to not be too heavily involved in the corporate bond market.

 

·         Bitcoin extends retreat from record high to hit lowest in 20 days

Bitcoin dropped 6.39% to $43,165.78 on Sunday, losing $2,944.20 from its previous close.

Bitcoin, the world’s biggest and best-known cryptocurrency, has fallen 26% from the year’s high of $58,354.14 on Feb. 21 when it soared amid increasing confidence that it will become a mainstream investment and payments vehicle.

 

·         House passes $1.9 trillion Covid relief bill, sends it to Senate

The House passed its $1.9 trillion coronavirus relief bill early Saturday, sending the massive proposal to the Senate as Democrats rush to approve more aid before unemployment programs expire.

It is the first major legislative initiative for President Joe Biden. The House approved it in a 219-212 mostly party line vote, as two Democrats joined all Republicans in opposing it.

Senators will start considering the pandemic assistance plan next week. Lawmakers will offer amendments, and the chamber will likely pass a different version of the bill, meaning the House would have to pass the Senate’s plan or the chambers would have to craft a final proposal in a conference committee.

 

·         Covid relief bill may trigger $36 billion cut to Medicare, higher student loan fees

  

·         CORONAVIRUS UPDATES:

Global Cases: 114.67 (+301,882)

Global Deaths: 2.54M (+5,839)

 

No. 1

U.S. Cases: 29.25M (+46,189)

U.S. Deaths: 525,650 (+1,157)

 

No. 2

India Cases: 11.11M (+15,616)

India Deaths: 157,195(+108)

 

No.3

Brazil Cases: 10.55M (+34,027)

Brazil Deaths: 255,018 (+755)

 

No.4

Russia Cases: 4.24M (+11,359)

Russia Deaths: 86,122 (+379)

No.5

UK Cases: 4.17M (+6,035)

 

No.6

France Cases: 3.75 (+19,952)

 

No.114

Thailand Cases: 25,951 (+70)

Thailand Deaths: 83

 

·         FDA approves Johnson & Johnson’s single-shot Covid vaccine for emergency use

The FDA’s emergency use authorization Saturday kickstarts the federal government’s plan to distribute nearly 4 million doses of J&J’s vaccine to states, pharmacies and community health centers across the nation next week. Unlike Pfizer’s and Moderna’s vaccines, J&J’s one-dose regimen eliminates the need for patients to return for a second dose and it can be stored at refrigerator temperatures for months.

Initially, doses would be limited, J&J has said. The company expects to deliver 20 million doses by the end of March, J&J’s vice president of U.S. medical affairs, Dr. Richard Nettles, told House lawmakers on Tuesday. J&J has a deal with the U.S. government to supply 100 million doses of its vaccine by the end of June, and U.S. officials say they are working with the company to ramp up supply as quickly as possible.

 

·         CDC director signs off on J&J’s single-shot Covid vaccine, clearing way for distribution to begin

 

·         Fauci says all three Covid vaccines highly effective, urges people to take shot most available

White House Chief Medical Advisor Dr. Anthony Fauci said on Sunday he would take the newly approved Johnson & Johnson Covid-19 vaccine and urged Americans to take whichever shot is available when they are eligible.

The Food and Drug Administration approved J&J’s vaccine on Saturday, giving the U.S. a third tool to fight the pandemic following vaccines from Moderna and Pfizer. The company expects to deliver 20 million doses by the end of March.

 

·         Covid vaccine for elementary school children likely coming in early 2022, Fauci says

 

·         Experts say Covid could become endemic

 

·         New Zealand’s largest city Auckland back to lockdown on Sunday after Covid-19 case

New Zealand’s Prime Minister Jacinda Ardern said on Saturday that the country’s biggest city, Auckland, will go into a seven-day lockdown from early morning on Sunday after a new local case of the coronavirus of unknown origin emerged.

 

·         China’s economy could double in size by 2035 — and surpass the U.S. along the way

Chinese President Xi Jinping said last November that it was possible to double the country’s gross domestic product by 2035.

Some observers said that may be hard to achieve, but Helen Qiao, head of Asia economics at BofA Global Research, said some reform measures would help China to get there.

In addition to doubling its economic size, China would surpass the U.S. as the world’s largest economy around 2027-2028, added Qiao.

 

·         Trading tax hike won’t harm competitiveness of Hong Kong’s stock market, says financial secretary

 

·         U.S. says Saudi crown prince approved Khashoggi killing, imposes visa restrictions on 76 Saudis

Saudi Crown Prince Mohammed bin Salman approved an operation to capture or kill journalist Jamal Khashoggi in 2018, according to a U.S. intelligence report that could further strain U.S.-Saudi relations as the White House reassesses ties with Riyadh.

The report by the Office of the Director of National Intelligence, released Friday, cited the crown prince’s control of decision-making in Saudi Arabia as well as the involvement of a key advisor and members of the prince’s protective detail in the operation that killed Khashoggi, a critic of the royal family.

Also Friday, Secretary of State Antony Blinken imposed visa restrictions on 76 Saudi individuals whom are “believed to have been engaged in threatening dissidents overseas, including but not limited to the Khashoggi killing.” A State Department spokesperson would not provide the names of those individuals, saying visa records are confidential under U.S. law.

However, The New York Times reported that the Biden administration would not penalize the crown prince for Khashoggi’s killing. The White House decided such action would have too high a cost on U.S.-Saudi cooperation in the areas of counterterrorism and confronting Iran, according to the Times.

 

·         White House defends decision not to punish Saudi crown prince, says U.S. does not sanction foreign leaders

 

·         State Department to provide more information on actions against Saudi Arabia as U.S. reviews ties

 

·         Biden tells Congress Syria strikes are consistent with U.S. right to self-defense

·         Iran condemns U.S. airstrikes in Syria and denies attacks in Iraq

 

·         Iran rejects informal nuke talks with U.S. and EU, insists Biden drop sanctions first

 

·         At least 18 killed in Myanmar on bloodiest day of protests against coup

 

Reference: CNBC, Reuters, Worldometers