Gold falls on stronger dollar ahead of U.S. inflation data
Gold dropped on Tuesday as a firmer dollar countered a slip in U.S. Treasury yields as investors looked ahead to U.S. inflation data that could influence the Federal Reserve’s timeline to taper monetary support.
· Spot gold was down 0.4% to $1,892.33 per ounce by 1:42 p.m. EDT (1742 GMT) while U.S. gold futures settled down 0.2% at $1,894.40.
· The dollar index rose 0.2%, lowering gold’s appeal for holders of other currencies, while benchmark U.S. Treasuries fell to a one-month trough.
· Analysts noted that U.S. consumer price index data due on Thursday could spark fears that the Fed will begin a move to scale back its wide-open monetary policy, driving gold prices lower.
· U.S. Treasury Secretary Janet Yellen also suggested that a slightly higher interest-rate environment “would actually be a plus for society’s point of view and the Fed’s point of view.”
· “It’s a tug of war between bulls and bears (for gold) at the 1,900 level,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago, adding that declining bond yields are the “best” near-term tailwind for bullion, while the strengthening dollar and rising equities prices were headwinds.
But Streible said that in the long term Fed policy was more likely to be shaped by the state of the U.S. job market and its recovery.
· Societe Generale, however, said gold prices could reach $2,000 by the end of 2021.
“The reflation theme continues to include gold and that remains the one factor that leads us to maintain our generally positive outlook for 2021,” the bank said in a note.
· Gold’s appeal as an inflation hedge could have also been bolstered by the recent declines in cryptocurrencies as it has brought some investors back to the safe-haven metal, said Michael Matousek, head trader at U.S. Global Investors.
· Gold ETFs bounce back
The global assets under management (AUM) of gold ETFs stand at 3,628 tonnes ($222 billion). The AUM is now only 9% shy of the August 2020 high of $240 billion and 7% shy of the October 2020 tonnage high of 3,908 tonnes, as per the report
SPDR GOLD HOLDINGS:
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· Bitcoin sell-off likely played a key role in boosting gold's appeal
Investors' appetite for gold increased as they assessed higher inflation and a major price crash in the Bitcoin market.
Meanwhile, physical gold exchange-traded funds (ETFs) recorded its strongest months in May 2021 since September 2020. The funds across the globe attracted a combined total of $3.4 billion compared to September's $4.8 billion, according to data provided by the World Gold Council (WGC).
In detail, U.S.-based gold ETFs experienced an inflow worth $2.1 billion. The European gold ETFs reported $1.6 billion worth of deposits. Nonetheless, Asian funds tracking the precious metal's prices noted an outflow of about $300 million.
Strong demand for gold ETFs also contributed to the rise of its spot prices. As a result, the XAU/USD exchange rate jumped 7.6% in May to $1,912.785 an ounce.
· Meanwhile, silver fell 1% to $27.59.
· Palladium dropped about 1% to $2,806.70.
· Platinum slipped 1.2% to $1,159.24.
· U.S. job openings jump to fresh record high in April
U.S. job openings surged by nearly one million to a new record high in April, while more people voluntarily left their employment, strengthening the view that a recent moderation in job growth was due to supply constraints.
Job openings, a measure of labor demand, increased by 998,000 to 9.3 million on the last day of April, the highest level since the series began in December 2000, the Labor Department said in its monthly Job Openings and Labor Turnover Survey, or JOLTS report, on Tuesday.
Hiring was little changed at 6.1 million in April from 6.0 million in the prior month. The government reported last Friday that job growth picked up in May, with employers raising wages, but the pace of hiring was below economists’ expectations for a second straight month.
· Global growth divergences will come to the fore in the second half of 2021: investment strategist
Grace Peters, EMEA head of Investment Strategy at J.P. Morgan Private Bank, discusses the outlook for markets amid a patchy global recovery.
· Biden shifts infrastructure talks to new bipartisan group
President Joe Biden on Tuesday broke off talks on an infrastructure bill with a key Republican, instead reaching out to a bipartisan group, after one-on-one talks with Senator Shelley Capito were described as hitting a "brick wall."
Biden changed course after Capito, the leader of a group of six Senate Republicans handling the negotiations, offered $330 billion in new spending on infrastructure, far short of Biden's reduced $1.7 trillion offer.
· Senate passes bipartisan tech and manufacturing bill aimed at countering China
The Senate on Tuesday passed one of the largest industrial bills in U.S. history in a bipartisan effort to ensure the U.S. remains competitive with China as one of the globe’s technological powerhouses.
· U.S. IRS chief asks Congress for authority to collect cryptocurrency transfer data
U.S. Internal Revenue Service Commissioner Charles Rettig said on Tuesday that Congress needs to provide clear statutory authority for the tax agency to collect information on cryptocurrency transfers valued at over $10,000 that largely go unreported.
· Bitcoin falls after U.S. seizes most of Colonial ransom
Bitcoin accelerated its slide to fall below the $32,000 level late Tuesday morning. The world’s largest cryptocurrency then recovered slightly, trading 9% lower at $32,854.99 as of 4:01 p.m. ET.
· CORONAVIRUS UPDATES:
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· Fauci says U.S. must vaccinate more people before Delta becomes dominant Covid variant in America
· CDC eases travel recommendations on 110 countries, territories including Japan
· Canada to unveil measures soon to ease U.S. border curbs for fully vaccinated
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