MTS Help Center

Gold tipped off 5-month peak by upbeat U.S. data, rising yields

·         Gold slipped below a near five-month price peak hit earlier in Tuesday’s session, as robust U.S. manufacturing data and higher Treasury yields dented its appeal.

 

·         Spot gold was 0.3% lower at $1,902.05 per ounce at 1:41 p.m. EDT (1741 GMT), after touching its highest since Jan. 8 at $1,916.40.

 

·         U.S. gold futures settled little changed at $1,905.

 

·         SPDR GOLD HOLDINGS:

 

 

·         “Gold has had a small setback as U.S. equities are continuing to power through, Treasury yields are starting to go up ... and on better manufacturing data,” Phillip Streible, chief market strategist at Blue Line Futures in Chicago, said.

 

Investors might think that the Federal Reserve is going to taper policy faster than anticipated, he added.

 

·         Data showed U.S. manufacturing activity picked up in May as pent-up demand boosted orders.

 

 

·         Benchmark U.S. Treasury yields rose to a more than one-week high, increasing the opportunity cost of holding gold.

 

·         Global stocks hit a record high as markets shrugged off concerns about rising inflation.

·         Providing support to gold, however, the dollar index shed 0.2% against rivals, making bullion cheaper for those holding other currencies.

 

·         Investors now await key U.S. economic readings, with the main event of U.S. payrolls figures due on Friday.

 

 

·         “The mounting pile of evidence that suggests we have reached peak economic momentum raises the risk that inflation-hedging flows into gold could start drying up,” TD Securities said.

 

“However, if inflation is indeed transitory, then we’re likely to see a prolonged period of uber-easy monetary policy, which suggests that market pricing for Fed hikes is too hawkish and ultimately that gold prices could firm further,” it added in a note to clients.

 

·         Among other precious metals, silver was down 0.3% at $27.97 per ounce.

·         Palladium rose 1.1% to $2,860.16.

·         Platinum gained 0.8% to $1,195.90.

·         U.S. manufacturing gains steam; raw material, labor shortages mounting

U.S. manufacturing activity picked up in May as pent-up demand amid a reopening economy boosted orders, but unfinished work piled up because of shortages of raw materials and labor.

The ISM’s index of national factory activity increased to a reading of 61.2 last month from 60.7 in April. A reading above 50 indicates expansion in manufacturing, which accounts for 11.9% of the U.S. economy. Economists polled by Reuters had forecast the index rising to 60.9 in May.

A shift in demand to goods from services as the COVID-19 pandemic kept Americans at home strained supply chains, with the virus also disrupting labor at manufacturers and their suppliers, leading to raw material shortages across industries.

Supply challenges are likely holding back the construction sector, with spending on projects rising only 0.2% in April after surging 1.0% in March, a separate report from the Commerce Department showed.

The survey’s forward-looking new orders sub-index jumped to 67.0 from a reading of 64.3 in April. Inventories at factories are barely growing and business warehouses are almost empty.

 

·         Biden to host Republican senator Wednesday for infrastructure talks -White House

President Joe Biden will host Republican U.S. Senator Shelley Moore Capito on Wednesday, the White House said, in hopes of hammering out a bipartisan infrastructure deal to revitalize America's roads, bridges and broadband internet systems.

 

·         Fed's Brainard says central bank's mortgage purchases part of broader effort to lower rates

The Federal Reserve’s purchases of mortgage-backed securities are having the same effect in lowering longer-term rates as its purchases of Treasury securities and are part of a broader effort to support the economy, Fed Governor Lael Brainard said on Tuesday.

 

Fed's Brainard: more 'progress' on recovery ahead, though still far from goals

The United States is getting closer to the Fed’s maximum employment and 2% inflation goals, Fed Governor Lael Brainard said on Tuesday, but the depth of the remaining problem still requires the central bank to stick to its super-easy monetary policy until more progress is seen.

 

·         Dip in U.S. Fed funds rate not expected to spur action yet

The interest rate banks charge each other for overnight loans eased closer to a record low as May wrapped up on Friday, but the move is unlikely to prompt U.S. Federal Reserve action unless it stays at the lower level.

The Fed Funds effective rate (EFFR) fell from 0.06% to 0.05% on Friday, just above a record low of 0.04% last reached in April 2020. It was previously at 0.05% at the end of April, but bounced back to 0.06% at the beginning of May, where it remained until Friday.

 

·         EU is finally ready to raise 750 billion euros ($917 billion) of much-needed funds from public markets and boost the economies of its 27 members after the severe shock from the coronavirus crisis.

 

·         EU reaches deal on tax transparency for multinational firms

European Union government and parliament negotiators reached a deal on Tuesday on rules that will force large multinational companies to disclose how much revenue and tax they pay in the 27-nation bloc and how much in countries considered tax havens by the EU.

Under the new law, multinational corporations with a turnover of more than 750 million euros ($916 million) annually in two consecutive years will have to declare profits, tax and number of employees in EU countries and in countries on the EU list of non-cooperative jurisdictions.

 

·         UK retailers report more inflation pressure as economy reopens

 

·         UK funds group calls on G7 to bolster corporate climate disclosures

 

·         CORONAVIRUS UPDATES:

 

 

·         WHO approves Sinovac COVID shot in second Chinese milestone

The World Health Organization (WHO) said on Tuesday it has approved a COVID-19 vaccine made by Sinovac Biotech (SVA.O) for emergency use listing, paving the way for a second Chinese shot to be used in poor countries.

The WHO said results showed it prevented symptomatic disease in 51% of those vaccinated and prevented severe COVID-19 and hospitalisation in 100% of the studied population.

The WHO's separate Strategic Advisory Group of Experts (SAGE) had said previously that vaccine efficacy in multi-country Phase III clinical trials ranged from 51% to 84%.

Indonesia said on May 12 that its study of 120,000 healthcare workers who had received the vaccine found it was 94% effective at preventing symptomatic disease.

 

·         U.S. administers 296.4 mln doses of COVID-19 vaccines - CDC

 

·         UK reports no new COVID-19 deaths for first time since March 2020

 

·         Britain seeks extra AstraZeneca shots to combat 'beta' COVID-19 variant

Britain is in talks with Oxford and AstraZeneca (AZN.L) for additional doses of their COVID-19 vaccine that has been modified to better target the "beta" coronavirus variant first identified in South Africa, and it will fund trials of the shots.

 

·         EU to add Japan to safe travel list, leave UK off for now

 

·         Vietnam detects hybrid of Indian and UK Covid-19 variants

- Authorities in Vietnam have detected a new coronavirus variant that is a combination of the Indian and UK Covid-19 variants

- The mutation spreads quickly by air, the health minister said.

- The World Health Organization (WHO) has identified four variants of SARS-CoV-2 of global concern.

After successfully containing the virus for most of last year, Vietnam is grappling with a rise in infections since late April that accounts for more than half of the total 6,856 registered cases. So far, there have been 47 deaths.

 

 

·         China reports first human case of H10N3 bird flu

 

·         Iran says nuclear talks not at impasse, but difficult issues remain