Gold retreats as dollar, U.S. yields gain after Fed minutes

 

·         Gold fell on Wednesday from a more than four-month high it hit earlier in the session as the dollar and U.S. Treasury yields rose after minutes from a Federal Reserve meeting showed the central bank might be inching closer to taper talks.

 

·         Spot gold eased 0.1% to $1,866.64 by 3:34 p.m. EDT (1934 GMT), having earlier risen as much as 1.2% to its highest since Jan. 8 at $1,889.75. U.S. gold futures settled up 0.7% at $1,881.50.

 

·         Some Fed officials appeared ready to begin considering changes to monetary policy based on continued rapid progress in the economic recovery, according to the Fed minutes.

 

·         “Gold whipsawed in a volatile session, rallying nearly $40 amidst market chatter of central bank interest before retreating after the Fed minutes indicated that ‘a number of participants’ suggested taper discussions might be appropriate if the economy continued to make rapid progress,” said Tai Wong, head of metals derivatives trading at BMO.

 

·         “Even though we are months away, the market is showing its sensitivity to a Fed change,” he said. “The new short-term range is $1,850-$1,890.”

 

·         Benchmark U.S. Treasury yields jumped to their highest in nearly a week, increasing the opportunity cost of holding gold, while the dollar index bounced back from a near three-month low after the Fed minutes.

 

·         “Gold traders may have thought they had a one-way ticket to $1,900, but the Fed Minutes triggered a big reversal as preview of taper talks sent Treasury yields soaring higher,” Edward Moya, senior market analyst at OANDA, said in a note.

 

·         “Despite the carnage over several asset classes, gold investors got to be happy with how it performed today. Some institutional traders got burned on bitcoin and will likely remain loyal to gold,” Moya said.

 

·         Silver eased 2% to $27.64 per ounce. Palladium fell 1.3% to $2,865.50, while platinum lost 2.6% to $1,186.50.

 

 

·         FOMC Minutes: Participants agreed economy is still far from Fed's goals

Minutes of the FOMC's April 27-28 meeting revealed on Wednesday that participants generally noted that the economy remained far from the Committee's maximum-employment and price-stability goals.

"A couple of Fed policymakers raised risks of inflation building to 'unwelcome' levels before sufficiently evident to induce policy reaction."

 

·         Fed not seeing anything new is very bullish, says David Katz on minutes

Michelle Meyer, Bank of America Global Research head of U.S. economics and David Katz, Matrix Asset Advisors CIO, join ‘Power Lunch’ to discuss the minutes from the Fed’s April meeting and what they think it means for markets and the U.S. economy.

 

·         Traders are now worried that the Fed isn’t being proactive enough

 

·         House Republicans introduce $400 billion transportation bill as another option for infrastructure

House Republicans introduced a 5-year, $400 billion transportation bill on Wednesday that directs historic levels of funding to highways, bridges and transit systems.

The bill comes amid ongoing talks this week between the White House and Senate Republicans over their competing infrastructure plans.

The bill unveiled on Wednesday represents a potential third option for infrastructure funding, one that’s more narrowly focused than either the White House plan or the Senate Republicans’ plan.

 

·         Senate Republicans do not offer Biden officials new infrastructure plan

 

U.S. Republican lawmakers met on Tuesday with top officials from President Joe Biden’s administration to seek common ground on an infrastructure proposal but said they did not present a new plan of their own.

 

Senator Shelley Moore Capito, who is leading the Republican effort, announced a counter-proposal of $568 billion in April, far short of Biden's $2.3 trillion plan. A bipartisan group of senators has discussed a package of roughly $1 trillion.

 

·         Cryptocurrency crunch is ‘a great opportunity to buy,’ trader says amid slew of negative catalysts

·         U.S. says no to French push for U.N. Mideast action

 

The U.S. mission to the United Nations said it "will not support actions that we believe undermine efforts to de-escalate" violence between Israel and Palestinian militants when asked on Wednesday about a French push for a Security Council resolution.

 

·         Hamas official predicts ceasefire soon but Israel-Gaza fight goes on

 

·         France’s Le Maire says peace and security at risk if African economies are left behind

 

French Finance Minister Bruno Le Maire on Wednesday warned that peace, security and global stability are in danger if the world’s economic superpowers do not contribute to Africa’s economic recovery from the Covid-19 crisis.

 

·         The test positivity rate has come down from 19.45% last Thursday to 13.31% on Wednesday as of 8 a.m. local time.