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·         Gold prices steadied on Tuesday, after falling to a near one-month low in the previous session, as investors awaited the U.S. Federal Reserve meeting for further clarity on rising inflation and monetary policy going forward.

 

Fundamentals

·         Spot gold was flat at $1,866.15 per ounce, as of 0052 GMT, after falling to its lowest since May 17 at $1,843.99 on Monday.

 

·         U.S. gold futures edged 0.1% to $1,868.40 per ounce.

 

 

·         The dollar hovered below a one-month high versus major peers, making gold less appealing for holders of other currencies.

 

·         Benchmark U.S. 10-year Treasury yields slipped below 1.50% to hover near a three-month low. Lower bond yields reduce the opportunity cost of holding non-interest bearing gold.

 

·         Investors now await the Wednesday outcome of the Fed’s two-day policy meeting. Nearly 60% of economists in a Reuters poll said a much-anticipated taper announcement will come in the next quarter, despite a patchy recovery in the job market.

 

·         Recent data showing a spike in U.S. consumer prices has benefited gold as it is seen as a hedge against inflation. But, rising inflation concerns could also force policymakers into an earlier tapering of currency-depreciating stimulus.

 

·         For the second time in less than a decade, the Fed is getting ready to launch a thorny debate over how and when to sunset a massive asset-purchase program that helped cushion an economy battered by the crisis.

 

·         Gold Futures: Room for a near-term rebound

 

Open interest in gold futures markets shrank for the second session in a row on Monday, this time by around 8.2K contracts considering preliminary figures from CME Group. On the other hand, volume extended the erratic performance and rose by around 21.2K contracts.

 

·         Gold Price Analysis: XAU/USD looks to $1880 after recapturing $1858 – Confluence Detector

 

Gold price is attempting a minor recovery above $1850, although the bulls appear to lack conviction, as the US dollar continues to hover near monthly highs. Further, a renewed uptick in the US Treasury yields also caps the bounce in gold price. Despite the limited bullish potential, gold continues to draw support from a lack of clarity on the Fed’s next policy move, as the central bank’s two-day monetary policy meeting begins later this Tuesday.

 

In the meantime, the key event risk for gold price remains the US Retail Sales data due later in the NA session at 1230 GMT alongside the Producers Price Index (PPI) release. The US economic releases could offer some hints on the upcoming Fed’s announcement, significantly impact the dollar moves and gold as well.

·         Gold Price: Key levels to watch

The Technical Confluences Detector shows that gold price is gathering strength before it extends Monday’s recovery towards the previous week’s low of $1870.

The next upside target for gold bulls awaits at $1880, which is the convergence of the Fibonacci 23.6% one-month, previous day’s high and Fibonacci 23.6% one-week.

Further up, the confluence of the SMA100 one-hour and Fibonacci 38.2% one-week at around $1884 could be probed.

Meanwhile, a failure to hold onto a dense cluster of support levels around $1862, the pivot point one-week S1 and SMA5 four-hour, could call for further weakness. 

The next critical support is seen at $1858, where the Fibonacci 38.2% one-day meets the Fibonacci 38.2% one-month.

The psychological $1850 level could be the last line of defense for the buyers.

 

·         Silver rose 0.1% to $27.85 per ounce, palladium was steady at $2,751.68, while platinum gained 0.2% to $1,166.93.

 

·         EU has carried out 300 million COVID-19 vaccinations - Von der Leyen

 

The European Union has passed the 300 million COVID-19 vaccinations threshold, European Commission President Ursula von der Leyen said on Tuesday.

 

·         UK’s Johnson delays COVID reopening by a month, citing Delta variant risk

 

Prime Minister Boris Johnson delayed his plans to lift most remaining COVID-19 restrictions by a month on Monday, warning that thousands more people might die if he did nothing because of the rapid spread of the more infectious Delta variant.

 

 

·         UK payrolled employees surge by 197,000 in May

 

The number of employees on British company payrolls surged by a record 197,000 in May as COVID restrictions eased and pubs and restaurants resumed indoor service, tax data showed on Tuesday.

 

The headline unemployment rate for the three months to April fell to 4.7%, the Office for National Statistics said, in line with economists' forecasts in a Reuters poll and its lowest since August.

 

 

·         Australia says trade deal with Britain agreed

 

Britain and Australia have agreed a trade deal after talks between their prime ministers ironed out outstanding issues, Australia's Minister for Trade Dan Tehan said on Tuesday.

 

 

·         EU-China investment deal is still possible — but not before 2023, analyst says

 

An investment pact between the European Union and China is still possible, but both sides may wait until 2023 at the earliest to ratify the deal, said an analyst from risk consultancy Eurasia Group.

 

The EU and China agreed on the deal in December after seven years of negotiations. But tensions between the two — which saw both sides imposing sanctions on each other — led the European Parliament to freeze the deal until Beijing lifts sanctions on EU politicians.

 

·         BOJ likely to extend pandemic-aid scheme this week - ex-c.banker Sakurai

The Bank of Japan is likely to extend a September deadline for its pandemic-relief programme at this week’s policy meeting, former BOJ board member Makoto Sakurai said.

 

·         China urges NATO to stop exaggerating 'China threat theory'

·         China c.bank injects 200 bln yuan through medium-term loans

China’s central bank rolled over maturing medium-term loans on Tuesday, while keeping the interest rate unchanged for the 14th month in a row.

The People’s Bank of China (PBOC) said it was keeping the rate on 200 billion yuan ($31.27 billion) worth of one-year medium-term lending facility (MLF) loans to some financial institutions steady at 2.95% from previous operations.

The fresh fund injection via the liquidity tool offsets the same amount of such MLF loans due on the same day.

·         BOJ likely to extend pandemic-aid scheme this week - ex-c.banker Sakurai

The Bank of Japan is likely to extend a September deadline for its pandemic-relief programme at this week’s policy meeting, former BOJ board member Makoto Sakurai said.

After tapering, BOJ must weigh exit from ETF holdings: former c.banker Sakurai

The Bank of Japan must eventually consider ways to unload its huge holdings of exchange-traded funds (ETF), such as by selling them to households, said former central bank policymaker Makoto Sakurai.

 

·         Japan to ship 1 million COVID-19 vaccines to Vietnam on June 16

 

·         Australia's central bank says 'premature' to end bond buying programme

 

Australia's central bank signaled on Tuesday its willingness to extend its bond purchase programme next month and laid out various options for the plan with the aim of meeting its goals of boosting employment and inflation.

 

Minutes of the Reserve Bank of Australia's (RBA) June policy meeting showed members discussed tapering and even ceasing its massive quantitative easing campaign when the current A$100 billion ($77 billion) round expires in September.

 

 

·         Australia and Britain reach agreement for free trade deal

 

Australia's minister for trade, Dan Tehan, said the pact was a "win for jobs, businesses, free trade and highlights what two liberal democracies can achieve while working together."

 

 

·         Czech central banker Dedek: holding fire in June seems "more reasonable"

 

Having kept its main two-week repo rate at 0.25% since May 2020, central bank policymakers have been weighing whether to start tightening in June or wait until the next meeting in early August.

 

Inflation eased to 2.9% in annual terms in May after a jump to 3.1% in April, and Dedek doubted whether flare up again so soon.

 

“That last figure created somewhat bigger comfort for the option to wait for another set of data,” Dedek said in an interview conducted on Monday.

 

 

·         AstraZeneca says antibody treatment failed in preventing COVID-19 in exposed patients

 

 

Reference: CNBC, Reuters,FXStreet