Gold crumbles under rising yields, dollar; hits 9-month low
Gold slumped to a near nine-month low on Thursday pressured by gains in the dollar and U.S. Treasury yields after Federal Reserve Chair Jerome Powell signaled no immediate move to address the surge in bond yields.
Spot gold fell 0.9% to $1,695.26 per ounce by 2:33 p.m. EST (1933 GMT), falling below the $1,700 level for the first time since June 2020.
U.S. gold futures settled down 0.9% at $1,700.7.
· “Gold prices have once again come under pressure as real yields have spiked following the market’s disappointment over Fed Chair Powell’s comments,” said Standard Chartered analyst Suki Cooper. “Prices have dipped below $1,700/oz and are testing the next support level at $1,689/oz although gold is technically oversold.”
· The recent rise in U.S. yields have eroded gold’s appeal as an inflation hedge by increasing the opportunity cost of holding non-yielding bullion.
Meanwhile, the dollar hit a peak since December 2020.
· Gold is likely to go lower from here, said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.
“The ETF liquidation is still very strong too. You have too many people that bought it at these higher levels... They are eventually going to throw the towel in on it,” Streible added.
· Holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, fell to their lowest since May 2020 on Wednesday.
· The U.S. Senate is expected to begin debating President Joe Biden’s $1.9 trillion coronavirus relief package on Thursday after agreeing to phase out payments to higher-income Americans.
· Meanwhile, data showed the number of Americans filing for jobless benefits rose last week.
· Silver fell 3.2% to $25.24 per ounce.
· Palladium eased 0.3% to $2,346.19.
· Platinum dropped 3.7% to $1,123.49.
· Fed's Powell pledges patience, says easy policy appropriate
U.S. Federal Reserve Chair Jerome Powell on Thursday repeated his pledge to keep credit loose and flowing until Americans are back to work, rebutting investors who have openly doubted if he can stick to that promise once the pandemic passes and the economy surges on its own.
Some investors expected Powell to “at least acknowledge that there is some concern regarding the pop in yield, which he didn’t do.”
“Overall his message remains the same, which is essentially they will maintain looser monetary policy until the economy shows consistent strength and we get back closer to what we were pre-pandemic in regards to both inflation and the labor market”
· Weekly jobless claims rise less than expected despite weather impact
Weekly jobless claims edged higher last week but rose less than expected for an economy struggling to shake off impacts from a pandemic that has been around now for nearly a year.
The Labor Department on Thursday reported that first-time filings for unemployment insurance in the week ended Feb. 27 totaled a seasonally adjusted 745,000, a touch below the Dow Jones estimate of 750,000. The total was a slight uptick from the previous week’s upwardly revised 736,000.
The report comes amid mostly positive signs for the U.S. economy.
· U.S. Senate votes to begin debate on Biden COVID-19 relief bill
The U.S. Senate voted on Thursday to take up President Joe Biden’s $1.9 trillion coronavirus aid bill, setting up what is likely to be a contentious, days-long debate over the merits of the sweeping package.
The party-line vote of 51-50, with Democratic Vice President Kamala Harris breaking the tie, illustrated that Democrats who narrowly control the chamber can expect little, if any, Republican support.
A vote on final passage could come over the weekend. Republicans are expected to use procedural tricks to drag out the process for as long as possible.
With no votes to spare, Democrats tweaked the bill to ensure that all 50 of their members would support it. They said they would steer more aid to smaller U.S. states and add money for infrastructure projects, among other changes.
· Nearly 160 million U.S. households to get virus stimulus checks: White House
A total of 158.5 million households would receive direct payments under the Senate version of a $1.9 trillion coronavirus stimulus bill, the White House said on Thursday.
White House spokeswoman Jen Psaki told reporters that the figure, crunched by the National Economic Council, means that 98% of the households that received payments in December would get checks under the stimulus.
· U.S. debt burden to rise to 202% of GDP in 2051, CBO projects
The U.S. federal debt burden will double over the next 30 years, reaching 202% of economic output in 2051, as deficits grow and interest rates eventually rise, the Congressional Budget Office said on Thursday in its latest long-term budget projections.
The non-partisan CBO projected that federal debt will reach 102% of gross domestic product in 2021 due to massive spending associated with the coronavirus pandemic. This spending is expected to fade over the next decade, shrinking annual deficits to an average of 4.4% of GDP in the 2022-2031 period, from 10.3% in 2021.
But deficits are forecast to then grow to average 7.9% of GDP in the 2032-2041 period and 11.5% of GDP in the 2042-2051 period, the CBO said in its projections, which it noted are based on currently enacted laws.
· CORONAVIRUS UPDATES:
COVID-19 infections are still rising in 69 countries.
Global Cases: 116.19 (+437,298)
Global Deaths: 2.58M (+9,659)
No. 1
U.S. Cases: 29.51M (+62,321)
U.S. Deaths: 533,388 (+1,745)
No.115
Thailand Cases: 26,162 (+54)
Thailand Deaths: 85 (+1)
· COVID-19 Vaccination
So far 112 countries have begun vaccinating people for the coronavirus and have administered at least 275,769,000 doses of the vaccine.
· European Union begins review of Russia’s Sputnik Covid vaccine
· Italy reportedly blocks shipment of AstraZeneca Covid vaccine destined for Australia
The European Union has made its first intervention into the supply of coronavirus vaccines, with Italy reportedly blocking a shipment of the AstraZeneca-Oxford vaccine to Australia on Thursday.
Reuters reported, citing two sources, that British pharma giant AstraZeneca had requested permission from Rome to ship around 250,000 doses from its Anagni, Italy, plant. However, the Italian government refused. The Financial Times also reported the same story.
A spokesperson for AstraZeneca declined to comment when contacted by CNBC. A spokesperson for the EU or the Italian Foreign Ministry wasn’t immediately available for comment.
· South Africa regulator says at advanced stage of Pfizer vaccine review
South Africa’s medicines regulator said on Thursday that it was at an advanced stage of reviewing an emergency use application for Pfizer’s COVID-19 vaccine.
· U.S. Commerce head to use tool to limit tech exports to China firms to 'full effect'
New U.S. Commerce Secretary Gina Raimondo said she will make full use of a powerful regulatory tool that has been deployed to limit the flow of U.S. technology and products to China’s Huawei and others.
“Chinese telecommunications companies -- their behavior is a threat to American economic and national security. We’re going to use (the entity list) to its full effect,” she told MSNBC in an interview released Thursday.
· Exclusive: U.S. blocked Myanmar junta attempt to empty $1 billion New York Fed account - sources
Myanmar’s military rulers attempted to move about $1 billion held at the Federal Reserve Bank of New York days after seizing power on Feb. 1, prompting U.S. officials to put a freeze on the funds, according to three people familiar with the matter, including one U.S. government official.
· Iran gives positive signals on informal nuclear talks, time short: sources
· Rising bond yields, dollar slug Asian shares, yen
Asian stocks skidded on Friday as rising U.S. Treasury yields again rattled equity investors while hoisting the dollar to a three-month high, which in turn dragged the Japanese yen to an eight-month trough.
Energy markets were not spared the volatility either, with oil prices surging more than 5% overnight to their highest in over a year, after OPEC and its allies agreed to keep production unchanged into April as demand recovery from the coronavirus pandemic was still fragile. [O/R]
In early Friday trade, Australian stocks shed 1%, Japan’s Nikkei share average lost 0.7%, shares in Seoul fell 0.24% and E-Mini S&P futures were a touch lower at 0.04%.
Reference: CNBC, Reuters, Worldometers
Thai
Eng
