· Gold prices scaled a more than four-month peak on Tuesday, as the dollar and U.S. Treasury yields slipped amid expectations that the U.S. Federal Reserve will keep its monetary policy accommodative.
· Spot gold rose 0.8% to $1,896.74 per ounce by 1:42 p.m. EDT (1742 GMT), having earlier hit its highest since Jan. 8 at $1,898.40. U.S. gold futures settled up 0.7% at $1,898.
· Data showed a U.S. consumer confidence index for May eased to 117.2.
· “With the consumer confidence pulling back a bit, we’re getting a knee jerk reaction. Some may be thinking that the Federal Reserve will be more dovish for a longer period of time now,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.
· Gold is often considered a hedge against inflation.
· Making bullion more affordable, the dollar index was pinned near 4-1/2 month lows, while U.S. yields touched a two-week low, reducing the opportunity cost of holding non-interest paying gold.
· Fed policy makers in separate remarks have played down inflation concerns and reiterated the current easy monetary policy will remain in place.
· ED&F Man Capital Markets analyst Edward Meir said “markets are getting a sense that inflation is more deeply embedded than what the Fed is currently expecting ... this is leading to money going into inflation hedges like gold.”
· “Gold has a good chance of getting to $2,000 during the second half of this year.”
· Elsewhere, palladium rose 1.7% to $2,774.22, platinum was up 1.8% at $1,195.54, and silver was 0.5% higher at $27.93.
· Gold price jumps following disappointing U.S. consumer confidence data
Gold prices are pushing into positive territory again following weaker than expected optimism among U.S. consumers.
Tuesday, the U.S. Conference Board said that its Consumer Confidence Index fell to a reading of 117.2, down from April’s revised reading of 117.5. The data missed expectations as economists were expecting a reading around 119.
The report noted that while consumers remain optimistic on the current state of the economy, they are not as optimistic about the future. The report said that the Present Situation index rose to a reading of 144.3, up from April’s reading of 131,9; Meanwhile the Expectations Index fell to a reading of 99.1, down from April’s reading of 107.9.
According to economists at CIBC, rising inflation pressure could be impacting consumer sentiment.
President Joe Biden will meet with Russian President Vladimir Putin on June 16 in Geneva, the White House said Tuesday.
“The leaders will discuss the full range of pressing issues, as we seek to restore predictability and stability to the U.S.-Russia relationship,” White House press secretary Jen Psaki said in a brief statement.
The Kremlin confirmed the meeting.
· German economy stutters as Covid-19 curbs push up savings rate
The German economy shrank more than expected in the first quarter as coronavirus-related restrictions spurred householders to put more money than ever into savings, data showed on Tuesday.
Europe’s largest economy contracted by 1.8% quarter on quarter and by 3.1% on the year, the Federal Statistics Office said. The readings, for which a Reuters poll had forecast drops of 1.7% and 3.0% respectively, were significantly weaker than the euro zone average.
· Blinken vows U.S. support to rebuild Gaza, prevent return to war
U.S. Secretary of State Antony Blinken pledged on a Middle East mission on Tuesday that Washington would rally support to rebuild Gaza as part of efforts to bolster a ceasefire between its Hamas Islamist rulers and Israel.
· Chinese bitcoin traders still wield ‘enormous influence’ despite Beijing’s 4-year crypto crackdown
· White House officials say China hasn’t been ‘completely transparent’ in Covid origin investigation
· Fed’s Daly says the economy is strong, but it’s ‘way too early’ to tighten policy
While she’s encouraged by the economic progress, San Francisco Federal Reserve President Mary Daly told CNBC on Tuesday that it’s still not time to change policy.
“We haven’t seen substantial further progress just yet. We’re still looking for substantial further progress,” Daly said during a live “Closing Bell” interview. “What we’ve seen is some really bright spots, some very encouraging news. It gives me hope, and I am bullish for the future. But it’s too early to say that the job is done.”
San Francisco Fed’s Mary Daly says recent inflation is transitory
Mary Daly, San Francisco Fed president, joins ‘Closing Bell’ to discuss the economic recovery and inflation. She says she believes inflation is still transitory and remains bullish about the fall.
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