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Gold tops $1,900/oz as dollar weakens, inflation jitters persist

 

·         Gold prices rose above the key psychological level of $1,900 per ounce on Wednesday, helped by a weaker dollar and growing inflation concerns after Federal Reserve officials maintained a dovish stance over rates.

 

·         Spot gold was up 0.3% to $1,904.50 per ounce by 0647 GMT, its highest level since Jan. 8.

 

·         U.S. gold futures gained 0.4% to $1,905.40 per ounce.

 

·         "A weaker dollar is helping and growing inflation risks are outweighing everything right now. This is about hedge against inflation right now," said Stephen Innes, managing partner at SPI Asset Management.

 

·         "Even if inflation is high, they're (the Fed) going to be very, very dovish. What really matters for gold is front-end real rates. The Feds will continue to keep front-end rates low, which is going to weaken the dollar and gold is going to do quite well."

 

·         The dollar index was pinned near a 4-1/2-month low against its rivals, making gold cheaper for other currency holders. [USD/]

 

·         Benchmark U.S. Treasury yields were hovering near a two-week low, reducing the opportunity cost of holding non-interest bearing gold. [US/]

 

·         Gold, often used as a hedge against inflation, has benefited from recent data showing a rise in prices in the United States and the United Kingdom.

 

·         Richard Clarida, the Fed's vice chair, said on Tuesday the U.S. central bank could curb any possible outbreak of inflation without throwing the economic recovery off track.

 

·         Investors now await key U.S. economic data due later this week, including gross domestic product, jobless claims and consumer spending.

 

·         Meanwhile, U.S. Senate Republicans plan to unveil a counteroffer to President Joe Biden's $1.7 trillion infrastructure proposal on Thursday, though one of their leaders said on Tuesday the two sides remained far apart.

 

·         Elsewhere, palladium rose 1.1% to $2,801.20 per ounce, silver climbed 0.4% to $28.09 and platinum jumped 1% to $1,203.99.

 

·         Dollar wallows at multi-month lows as Fed bangs dovish drum; euro ascendant

The dollar wallowed near its weakest since early January against major peers on Wednesday, as Treasury yields eased amid Federal Reserve insistence that stimulus will continue despite current inflationary pressures.

The euro traded around the key $1.2250 level, holding gains from Tuesday when it pushed as high as $1.2266 for the first time since Jan. 8, as Europe's pandemic recovery picks up pace, closing the gap with the U.S.

The dollar index , which gauges the greenback against six rivals, languished at 89.663 early in the Asian session, after pushing as low as 89.533 on Tuesday.

 

·         New Zealand hints at end to pandemic era monetary policy

New Zealand’s central bank held interest rates on Wednesday but hinted at a hike as early as September next year, becoming one of the first advanced economies to signal a move away from the stimulatory settings adopted during the COVID-19 pandemic.

The Reserve Bank of New Zealand (RBNZ) held rates at a record low 0.25%, but said it sees at least one 25 basis point rate hike by September 2022.

The RBNZ retained its large scale asset purchase (LSAP) programme but acknowledged the scheme could not reach its NZ$100 billion ($72.18 billion) limit by its June 2022 term end. It also left the Funding for Lending Programme (FLP) unchanged.

·         EU infrastructure for COVID certificate ready from June, von der Leyen says

 

The infrastructure for a digital vaccination certificate, intended to make traveling in the European Union easier, will be ready at EU level from June 1, according to the bloc's executive Commission.

 

 

·         U.S. signals in no rush to send COVID-19 shots to Taiwan

 

The top U.S. diplomat in Taiwan on Wednesday signalled Washington was in no hurry to send COVID-19 vaccines to the island, noting its infection numbers remained comparatively low, although he said talks were continuing on the issue.

 

 

·         Malaysia now has more Covid cases per million people than India

 

Malaysia’s daily Covid-19 cases are climbing rapidly and have surpassed India’s on one critical measure, according to statistics site Our World in Data.

 

India has been experiencing a devastating second wave since April and has the world’s second largest Covid caseload. The country’s daily case count, while trending downward, has remained elevated at hundreds of thousands of infections — far exceeding Malaysia’s few thousands a day.

 

But Malaysia’s daily Covid infections per million people — on a seven-day rolling basis — have exceeded that of India since Sunday, data compiled by Our World in Data showed. Latest statistics showed that Malaysia reported on Monday 194.4 cases per million people on a seven-day rolling basis, compared with India’s 178.04 cases.

 

 

·         Oil steady with investors focusing on possible return of Iranian supply

Oil prices were steady on Wednesday as concerns a possible resumption in Iranian supply would cause a glut were offset by hopes for stronger U.S. fuel demand after a drop in weekly inventory estimates by the American Petroleum Institute.

Brent crude oil futures for July gained 5 cents, or 0.1%, to $68.70 a barrel by 0102 GMT, while U.S. West Texas Intermediate (WTI) crude for July was at $66.05 a barrel, down 2 cents.