Gold heads for worst week in over a year after Fed blow
Gold struggled for traction in choppy trading on Friday en route to its worst week in over a year as the dollar extended its rally on the back of the U.S. Federal Reserve’s hawkish outlook.
· Spot gold edged 0.17% lower to $1,770.36 per ounce around 3:00 p.m. ET, stalling an initial uptick on some bargain buying.
· U.S. gold futures settled 0.3% down at $1,769.90 an ounce.
· Palladium was last down 1.94% at $2,462.18, while silver fell 0.23% to $25.86 and platinum dropped 1.94% to $1,037.53.
· The Fed said on Wednesday it would consider whether to taper its asset purchases in every subsequent meeting and brought forward projections for interest rate hikes into 2023.
· Bullion was further hurt by St. Louis Fed President James Bullard’s statement that inflation was stronger than anticipated and faster tightening of monetary policy was a “natural” response to it.
· “Markets are fearful of further Fed jawboning,” said David Meger, director of metals trading at High Ridge Futures.
It remains to be seen “how much Fed talk we’re going to get on potentially reducing asset purchases and raising interest rates at some point down the road, if these forecasts ring true,” Meger added.
· The dollar index was headed for its best week in nearly nine months, denting gold’s allure for other currency holders.
· But some analysts, including from Goldman Sachs and Commerzbank, said gold could be set for a recovery.
Commerzbank also kept its $2,000 an ounce year-end forecast unchanged.
· There may be more near-term selling pressure in gold but at some point bargain hunters could step in, sensing a buying opportunity given that rising inflation has been historically “bullish” for precious metals, said Kitco Metals senior analyst Jim Wyckoff.
· SPDR GOLD HOLDINGS:
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· Fed’s Kashkari opposed to rate hikes at least through 2023
Minneapolis Federal Reserve President Neel Kashkari said on Friday he wants to keep the U.S. central bank’s benchmark short-term interest rate near zero at least through the end of 2023 to allow the labor market to return to its pre-pandemic strength.
Kashkari’s remarks show he’s in a decided minority in an increasingly hawkish Fed, which on Wednesday wrapped up a two-day meeting with an unexpected result: with inflation on the rise, most Fed policymakers now see a case for starting interest rate hikes sooner.
Kashkari said he believes higher prices are being driven by a reopening economy and will subside as supply constraints recede.
· Obamacare survives after Supreme Court rejects latest Republican challenge
· ECB makes good progress on new strategy, Lagarde says
European Central Bank policymakers meeting this weekend made “good progress” in reshaping the ECB’sstrategic goals, including the role it plays in fighting climate change and a revised approach to inflation, President Christine Lagarde said on Sunday.
The 25 members of the ECB's Governing Council gathered in a hotel near Frankfurt to add impetus to the bank's first review of its approach to monetary policy in nearly two decades, which it aims to conclude in the second half of the year.
Lagarde gave no detail of the outcome of the talks, saying only that they covered the ECB's inflation goal and time horizon, links between climate change and monetary policy and the modernisation of central bank communications.
· Ireland wants a ‘compromise’ on Biden’s 15% global tax plan
Ireland is known for offering a low corporate tax rate, 12.5%, and a recent agreement among the seven most advanced economies potentially challenges that.
The G-7 finance ministers agreed this month that there should a minimum global corporate tax rate of 15%, as suggested by the Biden administration, as they try resolve calls for a fairer tax system.
The G-7 plan is under discussion at the OECD level and will be discussed by the G-20 leaders.
Taxation has become particularly important in the wake of the pandemic, given that many countries are desperate for new or stronger sources of income so they can repay the debt incurred during the crisis.
· Iran nuclear talks make progress in Vienna, diplomats say
· Europeans, U.S. warn Iran nuclear talks won’t be open-ended
· CORONAVIRUS UPDATES:
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· Brazil passes half a million Covid-19 deaths, experts warn of worse ahead
Only 11% of Brazilians have been fully vaccinated and epidemiologists warn that, with winter arriving in the southern hemisphere and new variants of the coronavirus circulating, deaths will continue to mount even if immunizations gain steam.
Over the past week, Brazil has averaged 2,000 deaths per day.
· India ask states to 'carefully calibrate' lockdown easing
India on Saturday reported 60,753 new COVID-19 cases and 1,647 deaths over the past 24 hours, according to a government statement.
· WHO says delta is becoming the dominant Covid variant globally
· U.S extends travel restrictions at Canada, Mexico land borders through July 21
· Australian PM promises more COVID-19 shots to states amid rollout delays
Australian states and territories will get more doses of COVID-19 vaccines soon, Prime Minister Scott Morrison said on Monday, as authorities look to avoid further delays in an immunisation drive that has hit several roadblocks.
Australian states have been asking for increased supplies of vaccines after Australia last week announced a policy shift that recommended AstraZeneca (AZN.L) shots for people only above 60 years due to clot concerns, throwing the rollout into disarray.
Reference: CNBC, Reuters, Worldometers
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