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Gold prices ticked up on Wednesday, lifted by a retreat in the dollar, although gains were kept in check after U.S. Treasury Secretary Janet Yellen said interest rates may need to rise.

·         Spot gold was up 0.25% at $1,782 per ounce.

·         U.S. gold futures rose 0.4% to $1,783.

 

·         SPDR GOLD SHARE HOLDINGS

·         “A pullback in the dollar more broadly, after last night’s strong selling has been supportive for gold prices,” IG Market analyst Kyle Rodda said.

 

“There is going to be a reasonably strong resistance zone between $1,800 and $1,810, if prices happen to push through there, you might see some buyers on the other side of that.”

 

·         The dollar index was down 0.1% against its rivals after scaling a near two-week peak in the previous session.

 

·         Gold prices fell more than 1% on Tuesday after Yellen said she sees no inflation problem brewing, downplaying earlier comments that rate hikes may be needed to stop the economy overheating as President Joe Biden’s spending plans boost growth.

 

·         Higher interest rates dull gold’s appeal as it increases the opportunity cost of holding non-yielding bullion.

 

·         Investor focus is expected to shift to April payrolls data due on Friday for further cues on the health of the U.S. economy.

 

·         So far, Federal Reserve Chair Jerome Powell has argued the labor market is still far short of where it needs to be to start discussing tapering asset buying.

 

·         Elsewhere, palladium futures rose 0.7% to $2,998 per ounce after hitting an all-time high of $3,017.18 in the previous session, driven by concerns of a shortage of the metal.

 

·         Supply shortage worries for the metal were worsened after top producer Nornickel announced disruptions at two Siberian mines due to waterlogging in March.

 

·         Silver slipped 0.5% to $26.42, while platinum eased 0.3% to $1,228, moving further away its highest in more than two months touched on Tuesday.

 

·         Clarida says the Fed is ‘a long way from our goals’ and tightening policy

Federal Reserve Vice Chairman Richard Clarida told CNBC on Wednesday that he thinks the central bank should keep its ultra-loose policy in place even as the U.S. economy storms back from its pandemic-era tumble.

In a “Closing Bell” interview, Clarida said he expects the economy to grow close to 7% for the full year, which would be the fastest pace since 1984.

He added that the jobs picture continues to improve, but still needs to progress considerably before the Fed will feel comfortable pulling back on all of the help it has provided since Covid-19 ended the longest expansion in U.S. history.

“We’re still a long way from our goals, and in our new framework, we want to see actual progress and not just forecast progress,” Clarida said.

 

Fed's Clarida says not time to talk taper, doesn't see economy overheating

 

·         Fed's Rosengren says inflation will normalize close to 2%

Inflation will be temporarily distorted this spring as the U.S. economy works through imbalances caused by the pandemic but the pressures should be short-lived and should not lead to a pullback in monetary policy, Boston Federal Reserve Bank President Eric Rosengren said on Wednesday.

Fed's Rosengren says conditions for tapering could be reached later this year

·         Fed's Mester: Will be 'deliberately patient' regarding inflation

The U.S. economy is recovering faster than many policymakers had expected, but a “broad-based recovery is taking more time to achieve” and more progress will be needed in the job market before the Federal Reserve’s conditions for reducing its extensive support will be met, the head of the Federal Reserve Bank of Cleveland said on Wednesday.

 

Fed's Mester: More progress needed in job market before forward guidance conditions met

The unemployment rate could fall to 4.5% or less this year and gross domestic product growth is likely to be in the “6 to 7% range,” Cleveland Fed President Loretta Mester said in prepared remarks to the Boston Economic Club.

 

·         Markets seem ‘reluctant’ to believe the Fed’s policy goals: Strategist

Jon Adams from BMO Global Asset Management talks about Fed policy and the indicators the central bank is watching before it considers raising interest rates.

 

·         U.S. private payrolls post biggest gain in seven months

U.S. private payrolls surged by the most in seven months in April as companies rushed to boost production amid a surge in demand, suggesting the economy gained further momentum early in the second quarter, powered by massive government aid and rising COVID-19 vaccinations.

Strengthening labor market conditions were reinforced by other data on Wednesday showing a measure of services industry employment increased last month by the most in more than 2-1/2 years. The reports bolstered expectations for another month of blockbuster employment growth in April.

Private payrolls rose by 742,000 jobs last month, the largest gain since last September, the ADP National Employment Report showed. Companies hired 565,000 workers in March. Economists polled by Reuters had forecast private payrolls would increase by 800,000 jobs in April.

 

·         U.S. service sector slows modestly in April - ISM survey

U.S. services industry activity grew at a slightly slower pace in April, likely restrained by shortages of inputs amid a burst of demand that is being driven by massive fiscal stimulus and a rapidly improving public health environment.

The Institute for Supply Management (ISM) said on Wednesday its non-manufacturing activity index fell to a reading of 62.7 last month from 63.7 in March, which was the highest on record.

 

·         U.S., China to assess Phase 1 deal soon, Biden trade chief says

U.S. Trade Representative Katherine Tai said on Wednesday she expects to engage “in the near term” with Chinese officials to assess their implementation of the “Phase 1” trade deal between the two countries, with the outcome to influence the fate of Washington’s punitive tariffs on Beijing.

Tai told a Financial Times online event that she respects the need for continuity in U.S.-China trade policy, including the two-year trade deal implemented last year by the Trump administration.

 

·         Bank of England to say UK recovery is accelerating

The Bank of England will say on Thursday that Britain’s economy is heading for a much stronger recovery this year than it previously expected and it might start to slow its pandemic emergency support.

The BoE forecast in February that the world’s fifth-biggest economy would grow by 5% in 2021, having slumped by 10% in 2020.

 

·         CORONAVIRUS UPDATES:

 

·         Moderna says Covid booster shot generates promising immune response against variants found in South Africa, Brazil

 

·         CDC projects a surge in U.S. Covid cases through May due to variants before vaccinations drive a ‘sharp decline’

·         U.S. cases, vaccinations continue to drop as White House sets new inoculation goal

President Joe Biden on Tuesday said the United States would soon be entering a “new phase” of the country’s vaccination campaign once the most eager Americans have received a shot.

Biden set two new goals for July 4: Getting 70% of U.S. adults to receive at least one dose of a Covid vaccine and having 160 million adults fully vaccinated.

The country would hit those goals by mid-June if the current vaccination rate held steady between now and then, but the pace of daily inoculations has been falling for weeks, down 35% from peak levels a few weeks ago.

 

·         WHO to open a global pandemic ‘intelligence’ hub in Germany

The World Health Organization has announced plans for a “Global Hub for Pandemic and Epidemic Intelligence” in Germany, which it says will help gather data to predict and prevent future pandemics.

The new center for pandemic and epidemic intelligence, data, surveillance and analytics will be based in Berlin but will involve a global collaboration of countries and partners worldwide.

 

·         Singapore’s Covid situation could start improving in a matter of weeks, professor says

Singapore is facing its biggest local outbreak of Covid-19 infections in months — but the situation could improve in the coming weeks, according to Dale Fisher, chair of the World Health Organization (WHO) Global Outbreak Alert and Response Network.

“We believe that we can break the transmission chains,” he told CNBC’s “Street Signs Asia” on Wednesday.

 

·         3 key trends are set to dominate consumer behavior in Asia in 2021, survey says

The coronavirus economic recovery, continued tech adoption and increased demand for health products are three trends set to dominate consumer behavior in Asia in 2021.

New research from private equity firm L Catterton found consumer sentiment was up since the start of the year.

Consumers in Asia were most positive about the economic outlook, though the study was conducted prior to the recent surge in cases in India.

 

·         EU announces new powers to restrict takeover bids by foreign entities

The European Union wants to restrict foreign companies that receive government subsidies from engaging in its market, potentially causing repercussions for Chinese-backed firms in particular.

The European Commission, the executive arm of the EU, proposed on Wednesday three new tools to enable it to have the power to investigate financial contributions given by public authorities from non-EU nations. This would happen when the recipient firm tries to participate in the European market.

“We want every company that operates in Europe no matter where it comes from to respect our house rules,” European competition chief, Margrethe Vestager, said during a press conference.

 

·         Germany, France, Spain reach general agreement over fighter jet: source