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Gold prices steadied below the key $1,900 an ounce level on Thursday as easing U.S. Treasury yields offset upbeat U.S. data that showed a recovery in the world’s largest economy was on track.

·         Spot gold was little changed at $1,896.76 per ounce by 1:53 p.m. EDT (1753 GMT).

·         U.S. gold futures settled down 0.3% at $1,898.5.

·         “The U.S. economy is on a solid trajectory for growth and the inflation argument has ebbed a bit because the Federal Reserve has had some success in convincing the marketplace that it is indeed just going to be transitory,” said Kitco Metals senior analyst Jim Wyckoff.

 

“So it’s just a pause from the recent uptrends. However, we shouldn’t be surprised to see some bargain hunters step in to buy the dip in prices later in the session.”

 

·         Data showed U.S. new jobless claims dropped more than expected, while economic growth accelerated in the first quarter.

 

·         Benchmark U.S. Treasury yields edged lower, translating into reduced opportunity cost of holding non-yielding gold.

 

·         Investors await the monthly U.S. personal consumption report on Friday.

 

·         “We don’t have as many people coming in to buy gold right now because it has run for two months straight, statistically it is overbought,” said Michael Matousek, head trader at U.S. Global Investors.

 

“But if inflation keeps rearing its head, gold is going to be overbought even more, cause people are going to start jumping in saying they need to own it.”

·         On the physical front, gold imports into top consumer China from Hong Kong and Switzerland surged in April.

·         Palladium rose 2.3% to $2,806.67 per ounce, while silver gained 0.5% to $27.83.

·         Platinum fell 1%, to $1,178.86.

·         Top producer Nornickel said a deficit in the palladium market could widen in 2021.

 

·         Copper rises as strike fears and Chinese data reassure bulls

Copper and other industrial metals prices rose sharply on Thursday, helped by strong U.S. data, the threat of strikes at mines in top copper producer Chile and an easing of fears that China, the biggest consumer, will tighten monetary policy.

Benchmark copper on the London Metal Exchange (LME) was up 2.7% at $10,244 a tonne at 1605.

Prices of the metal used in power and construction surged to a record high of $10,747.50 this month before slipping to $9,795 on Monday.

 

·         U.S. GDP expanded at unrevised 6.4% rate in first quarter

 

·         U.S. weekly jobless claims drop to fresh 14-month low; economic recovery gaining speed

Initial claims for state unemployment benefits fell 38,000 to a seasonally adjusted 406,000 for the week ended May 22, the Labor Department said. That was the lowest since mid-March 2020 and marked the fourth straight weekly decline in applications.

 

·         U.S. pending home sales decline in April

Contracts to purchase previously owned U.S. homes declined in April following a record-low inventory of homes for sale in the first quarter of 2021.

The National Association of Realtors (NAR) said on Thursday its Pending Home Sales Index, based on contracts signed last month, fell 4.4% to 106.2. Economists polled by Reuters had forecast pending home sales rising 0.8% percent.

·         Biden to push $6 trillion U.S. budget for next fiscal year -NYT

President Joe Biden will seek $6 trillion in U.S. federal spending for the 2022 fiscal year, rising to $8.2 trillion by 2031, the New York Times reported on Thursday, a day before the White House is expected to unveil its budget proposal.

Citing documents it had obtained, the Times said the Democratic president planned to pay for his agenda through increased taxes on corporations and high earners, and that the budget deficits would start to decrease in the 2030s.

On Friday, Biden is set to release his first full budget since taking office in January as he seeks to push his priorities of investing in infrastructure, childcare and other public works in a national rebuilding effort.

 

·         Biden's defense budget seeks greater China deterrence and nuclear funding

U.S. President Joe Biden's $715 billion Department of Defense budget will shift funding from old systems to help modernize the nuclear arsenal to deter China, while also developing future warfare capabilities, people familiar with the budget said.

The defense spending request, which will be sent to Congress on Friday, is expected to contain investments in troop readyness, space, the Pacific Deterrence Initiative aimed at countering China's military build-up in the region and nuclear weapons technology, the people said.

 

·         Republicans up infrastructure offer to $928 billion, keeping talks alive

 

·         White House, Treasury watching inflation closely, Yellen says

U.S. Treasury Secretary Janet Yellen said on Thursday she believes recent rise in inflation will prove temporary and that there is still slack in the economy, but that the White House, Congress, and Treasury are watching it close and have the tools to address it if needed.

“The recent inflation we have seen will be temporary, it’s not something that’s endemic,” Yellen told the House Appropriations Committee, noting that what’s driving it is a rebound from very low measures last year and shortages of materials. “I expect it to last several more months and to see high annual rates of inflation through the end of this year.”

 

·         Yellen says Biden budget raises U.S. debt-to-GDP ratio but is responsible

U.S. Treasury Secretary Janet Yellen said on Thursday that President Joe Biden’s fiscal 2022 budget request will increase the U.S. federal debt-to-GDP ratio above its current level of about 100% over the next decade.

 

·         Fed’s Kaplan cites real estate excesses as one reason to start tapering purchases

Dallas Federal Reserve President Robert Kaplan cited potential excesses in the housing market and other inflation signs as an indication that the central bank should start slowly pulling back on its asset purchase program.

With the Fed still buying at least $120 billion in bonds each month, a total that includes $40 billion in mortgage-backed securities, several officials have said it’s time to at least start discussing easing off the historically aggressive injections into the fixed income market.

In an interview Thursday afternoon with CNBC, Kaplan reiterated his call for a gradual change in policy.

 

·         Fed reverse repo volume hits record high

The amount of cash flowing into the U.S. Federal Reserve’s reverse repurchase (RRP) facility hit an all-time high of $485 billion on Thursday, further pressuring key short-term interest rates, which could fall below zero.

 

·         Fed to hold Jackson Hole symposium in person, after COVID hiatus

The Kansas City Federal Reserve Bank said on Thursday that it will host “a modified, in-person program” for this year’s central bankers’ confab in Jackson Hole, Wyoming, after last year holding the high-profile conference online amid the COVID-19 epidemic.

“The event will adhere to all health and safety guidelines that are in place at the time of the program,” the Kansas City Fed said in a statement. Closer to the event, which will take place Aug. 26-28, “we anticipate providing notice of keynote speeches that will be available to the public virtually, in real-time.”

 

·         CORONAVIRUS UPDATES:

 

·         Japan looks to extend Tokyo state of emergency to June 20, minister says

 

Reference: CNBC, Reuters, Worldometers