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​Gold slips as dollar strengthens on ‘transitory’ inflation view

Gold prices slipped on Friday, hurt by a strengthening dollar as some investors bet that recent spikes in U.S. consumer prices are temporary.

·         Spot gold fell 1.2% to $1,875.31 per ounce by 2:01 p.m EDT (1801 GMT).

·         U.S. gold futures settled 0.9% lower at $1,879.6.

·         The dollar index gained 0.6%, dimming gold’s appeal to investors holding other currencies.

 

·         TD Securities commodity strategist Daniel Ghali said gold’s failure to break above $1,900 per ounce after U.S. non-farm payrolls and CPI data suggests inflation hedging flows were slowing at the same time as physical flows were weakening.

 

“As a result a pullback in gold should unfold,” Ghali said, adding that while there could be a near-term pullback to $1,850 per ounce, gold in the medium-term should be supported by dovish central bank policies for a prolonged period of time.

·         Data on Thursday showed U.S. consumer prices rose sharply in May, but analysts say the spike is likely “transitory” and therefore fears over the Federal Reserve policy tightening have ebbed.

·         On the physical front, dealers in top-hubs India and China were forced to offer discounts to lure customers this week.

·         Market participants now eye next week’s U.S Federal Reserve policy meeting.

·         Expectations that the Fed will stick to the “inflation is transitory script” are high, but recent labor market improvements and a “red-hot” inflation number raise the risk that the Fed will be less dovish, Edward Moya, senior market analyst at OANDA, wrote in a note.

·         Palladium rose 0.2% to $2,783.10 per ounce.

·         Platinum fell 0.3%, to $1,147.08 per ounce.

·         Automobile companies had likely already anticipated the impact of the global semiconductor shortage and replenished their inventories of autocatalyst metals platinum and palladium, limiting its impact on price, Ghali said.

 

Platinum and palladium are used as catalysts in vehicles to reduce emissions.

·         Silver was steady at $27.96 an ounce.

 

·         U.S. consumer sentiment declined in May

U.S. consumer sentiment deteriorated in May as consumers grew more concerned about a pickup in inflation, a survey released on Friday showed.

The University of Michigan's Consumer Sentiment Index fell to a final reading of 82.9 from April's final level of 88.3, though it was little changed from May's preliminary reading of 82.8.

That was in line with the median forecast among economists polled by Reuters.

 

·         Bipartisan group of U.S. senators says it has a deal on infrastructure framework

A bipartisan group of 10 U.S. senators said on Thursday it had reached agreement on a framework for a proposed infrastructure spending bill that would not include any tax increases.

 

·         Pelosi says new Senate infrastructure plan could be a hard sell

U.S. Democrats will not back down on President Joe Biden's sweeping infrastructure goals, House of Representatives Speaker Nancy Pelosi said on Sunday, signaling turbulence ahead for a scaled-back bipartisan proposal unveiled in the Senate.

 

·         Biden to route U.S. border wall funds to military and construction site clean up

 

·         Biden touches down in Brussels on eve of NATO, EU summits

U.S. President Joe Biden arrived in Brussels on Sunday evening ahead of two days of summits with NATO and the European Union, part of his first foreign trip since taking office and one aimed at reinvigorating transatlantic ties.

Biden already attended a summit of G7 rich democracies in Britain over the weekend. He will next join a meeting of NATO national leaders in Brussels on June 14, followed by a summit on June 15 with top EU officials in the bloc's political hub.

Biden has vowed to rebuild relations with allies after four rocky years under former President Donald Trump, who pulled Washington out of a global pact to fight climate change and threatened at one point to quit NATO.

After Brussels, Biden will travel to Geneva to meet Russian President Vladimir Putin on June 16.

 

·         Biden suggests 'autocrat' Putin's Russia might be weaker than it seems

 

·         Biden says U.S. is ‘back at the table’ following G-7 summit

 

·         G-7 leaders agree on vaccines, China and taxing corporations

 

·         G-7 chides China on rights, demands COVID origins investigation

 

·         G-7 nations agree to boost climate finance, details missing

 

·         G-7 split on reallocating $100 billion IMF funds to COVID-hit nations

Group of Seven leaders were trying to resolve differences over a proposal to reallocate $100 billion from the International Monetary Fund’s warchest to help countries struggling to cope with the COVID-19 crisis.

An almost final version of the G7 communique seen by Reuters showed Germany and Italy had yet to back the inclusion of the $100 billion figure in the final statement by leaders.

 

·         IMF eyes new trust to provide aid to broader group of countries-Georgieva

The International Monetary Fund is exploring creation of a new trust that could allow its members to lend their IMF reserves to more countries, including middle-income countries vulnerable to climate change, IMF chief Kristalina Georgieva said on Sunday.

·         U.S. Trade Representative Tai to hold talks in Britain next week

U.S. Trade Representative Katherine Tai will travel to Britain on Wednesday and hold talks with British trade minister Elizabeth Truss after participating in a U.S.-European Union summit and holding several bilateral meetings, her office said.

 

·         Britain wants to ease tensions with EU over N.Ireland, says Raab

Britain wants to ease tensions with the European Union over trade with Northern Ireland, British foreign minister Dominic Raab said on Sunday, repeating a warning that the bloc had to realise the province was part of the United Kingdom.

 

·         China’s attacks on ‘foreign forces’ threaten Hong Kong’s global standing -top U.S. envoy

 

·         Biden welcomes new Israeli government, reaffirms security support

 

·         Israel votes in new government amid parliament chaos, ending Netanyahu’s 12-year rule

 

·         CORONAVIRUS UPDATES:

·         U.S. has administered 309.3 mln doses of COVID-19 vaccines, CDC says

 

·         AstraZeneca shots have good risk-benefit profile for over 60s, says EMA official

 

·         UK’s Johnson set to announce delay to end of COVID restrictions

 

Reference: CNBC, Reuters, Worldometers