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Gold eases on swift recovery bets as focus turns to Fed minutes

Gold prices fell on Wednesday a day after hitting a more than one-week peak, as strong economic data from the United States bolstered hopes of a swift recovery dimming the precious metal’s appeal.

Spot gold fell 0.4% to $1,737.01 per ounce by 3:14 p.m. EDT (1914 GMT). U.S. gold futures settled 0.1% lower at $1,741.6.

·         “If we get continued strength in economic reports I think we are going to see much greater likelihood of interest rates increasing ... yields increasing. That ultimately is going to have negative impact on gold,” said Jeffrey Sica, founder of Circle Squared Alternative Investments.

 

“There’s not much indicative of what they intend to do (with regards to interest rates) which makes it obvious that for any real clarity we have to wait and see what happens with economic news,” Sica said.

 

·         Non-yielding bullion is highly sensitive to higher rates, as they increase the opportunity cost of holding gold.

 

·         Data on Tuesday showed U.S. job openings rose to a two-year high in February, while strengthening domestic demand helped hiring amid increased COVID-19 vaccinations and additional pandemic aid from the government.

 

Meanwhile, the U.S. Federal Reserve remained cautious about the continuing risks of the coronavirus pandemic and committed to pouring on monetary policy support until a rebound was more secure, minutes of the central bank’s March meeting showed.

 

The International Monetary Fund raised its outlook for global economic growth again on Tuesday, forecasting worldwide output would rise 6% this year, a rate not seen since the 1970s.

 

·         The S&P 500 added to gains, while the dollar index inched up after the Fed released the minutes.

 

·         Among other precious metals, silver fell 0.2% to $25.12 per ounce. Palladium was down 2.3% to $2,622.71 per ounce, having earlier hit a one week low of $2,592.

 

 

·         Platinum fell 0.6% to $1,225.39 per ounce, having earlier risen to $1,244.50, its highest since Feb. 25.

 

·         Dollar near two-week lows as investors await Fed minutes

The U.S. dollar hovered near a two-week low against a basket of currencies on Wednesday, as profit-taking and weakness in U.S. yields exerted pressure.

The U.S. Dollar Currency Index, which measures the greenback against a basket of six currencies, was 0.101% lower at 92.213.

 

·         Major cryptocurrency Ethereum reached a peak of $2,151.63 on Tuesday, before paring gains.

The rise of Ethereum, which like most smaller cryptocurrencies tends to move in tandem with bitcoin, has helped the cryptocurrency market capitalization reach a record $2 trillion on Monday, data and market trackers CoinGecko and Blockfolio showed.

 

·         Fed officials say easy policy will stay in place until economic ‘outcomes’ are achieved

Federal Reserve officials indicated at their last meeting that easy policy will stay in place until it produces stronger employment and inflation, and won’t be adjusted based merely on forecasts.

Markets reacted little to the news, though some questioned whether the Fed needs to continue its historically accommodative policy stance.

The market will get plenty of notice before the committee makes any changes, the minutes said.

 

·         Fed’s Brainard says the economy is improving but is still ‘far from’ where it needs to be

Federal Reserve Governor Lael Brainard said Wednesday that while the U.S. economic outlook has “brightened considerably,” it remains well away from the central bank’s goals.

“Brighter outlook, but of course our monetary policy forward guidance is premised on outcomes not the outlook, and so it is going to be some time before both employment and inflation have achieved the kinds of outcomes that are in that forward guidance,” Brainard said on CNBC’s “Closing Bell.”

 

·         Biden open to negotiating on corporate tax hike, but says U.S. must take bold action on infrastructure

 

·         Analysis: White House, U.S. companies could agree on 25% tax rate, officials, business groups say

 

·         Biden tax plan would recapture $2 trillion in corporate profits from overseas, Treasury says

Treasury Secretary Janet Yellen on Wednesday touted the Biden administration’s proposed changes to the corporate tax code and said in detail that the plan would be fairer, reduce incentives for companies to shift factories and income overseas, and generate revenues for domestic priorities.

Treasury officials said the Made In America tax plan, tied to President Joe Biden’s $2 trillion infrastructure overhaul, would recoup about $2 trillion in corporate profits into the U.S. currently derived overseas.

 

·         U.S. confident vast majority of developed nations will agree to global minimum tax, Treasury deputy says

Adewale Adeyemo, Treasury Secretary Janet Yellen’s deputy, on Wednesday said increasing the U.S. corporate tax rate to 28% will not make American companies less competitive, because the Biden administration is confident it can win the support of developed nations to set a minimum tax worldwide.

“We’ve worked very closely with our international counterparts to counter what has been a race to the bottom in terms of international taxation,” Adeyemo, who goes by Wally, told CNBC’s Sara Eisen.

 

·         McConnell suggests targeted infrastructure plan without changes to 2017 tax cuts

 

·         U.S. Senate readying legislation on semiconductors, Biden says

 

·         U.S. prepared to consider North Korea diplomacy aimed at denuclearization -White House

 

·         IMF chief worried about middle-income countries, urges expanded definition of 'vulnerable'

The head of the International Monetary Fund on Wednesday said she would discuss with IMF members whether they back offering low- and no-interest financing to middle-income countries hit hard by the pandemic, not just the poorest countries.

 

·         IMF’s top economist says Covid vaccines are the ‘main weapon’ to achieve a faster economic recovery

 

·         Coronavirus Updates:

COVID-19 infections are still rising in 61 countries.

 

Global Cases: 133.66M (+645,803)

Global Deaths: 2.89M (+12,857)

 

No. 1 - 3

U.S. Cases: 31.63M (+73,253)

U.S. Deaths: 571,097 (+837)

 

Brazil Cases: 13.19M (+90,973)

Brazil Deaths: 341,097 (+3,733)

 

India Cases: 12.92M (+126,315)

India Deaths: 166,892 (+684)

 

No.114

Thailand Cases: 29,905 (+334)

Thailand Deaths: 95

 

Europe Cases: 40.82M (+132,181)

Europe Deaths: 936,655 (+4,348)

 

Asia Cases: 30.05M (+265,036)

Asia Deaths: 439,983 (+2,031)

 

·         Global Vaccination

So far, at least 156 countries have begun vaccinating people for the coronavirus and have administered at least 692,846,000 doses of the vaccine.

 

·         Brazil detects first case of South African variant, grave shortage looms as death toll soars

 

·         EU medicines regulator finds possible link between AstraZeneca Covid vaccine and blood clots

Europe’s medicines regulator on Wednesday announced a possible link between the coronavirus vaccine developed by AstraZeneca and the University of Oxford and rare blood clotting issues in adults who received the shot.

 

·         EU drug regulator says up to countries to decide how to handle AstraZeneca

 

·         Women under 60 face higher risk of rare clotting after AstraZeneca shot - German official

 

·         Italy, Britain suggest age limits for AstraZeneca vaccine but still recommend it

Italy recommended on Wednesday that AstraZeneca’s COVID-19 shot only be used on those over 60 and Britain that people under 30 should get an alternative, due to possible links between the vaccine and very rare cases of blood clots.

 

·         Britain advises alternative to Oxford/AstraZeneca COVID-19 vaccine for under-30s

 

·         Australia to review EU findings on AstraZeneca vaccine and blood clots

·         Australia has no plans to change AstraZeneca vaccine rollout, PM says

 

·         Mexico says no plans for now to limit AstraZeneca vaccine after UK guidance

 

·         AstraZeneca to flag possible blood clot side-effect of COVID-19 vaccine on labelling

 

·         COVID-19 prevalence in England dropped in March, but decline flattening off: study

·         Algeria to start Russia's Sputnik V vaccine production in September

 

·         Argentina curtails leisure, public transport use after hitting new COVID-19 record

 

·         Proof of Covid-19 vaccination, tests should only be temporary travel requirements, industry group says

 

·         Goldman Sachs downgrades India’s growth forecast as Covid cases spike

The investment bank on Tuesday lowered India’s growth forecast for the April-June quarter from 33.4% year-on-year previously, to 31.3%.

India reported more than 103,000 new cases over a 24-hour period on Monday, which surpassed levels seen in September when the first wave of infection reached its peak.

 

·         Iran welcomes ‘new chapter’ in nuclear talks as Washington seeks to heal ‘profound differences’ in Vienna

Iran’s President Hassan Rouhani told a cabinet meeting in Tehran on Wednesday that initial talks with the U.S. and world powers in Vienna to rescue the deal were a “success” that opened a “new chapter” to save the agreement.

Both countries described the indirect talks on Tuesday as a “useful step” and “constructive” despite neither representative actually meeting face-to-face.

President Joe Biden has ruled out any “unilateral gestures” but is still open to exploring how the U.S. might resume its own compliance with the deal.

 

·         Myanmar security forces kill 15 protesters, junta leader says opposition aims to "destroy" country

 

·         Asia-Pacific markets mixed as the Fed signals easy policy will stay for now

Stocks in Asia-Pacific trade mixed on Thursday morning after the S&P 500 nudged higher to a record closing high overnight.

In Japan, the Nikkei 225 slipped 0.55% while the Topix index declined 0.62%. South Korea’s Kospi also shed 0.32%.

Shares in Australia rose, with the S&P/ASX 200 up 0.39%.

MSCI’s broadest index of Asia-Pacific shares outside Japan traded 0.1% lower.

Reference: CNBC, Reuters, Worldometers