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Gold drifted sideways on Monday as investors were caught between fears of a spike in the highly transmissible Delta strain of the coronavirus and expectations of an early interest rate hike by the U.S. Federal Reserve.

Non-yielding gold, which is also seen as a safe investment during uncertain times, tends to fall out of favor among investors when interest rates rise.

·         Spot gold was steady at $1,779.70 per ounce by 1:31 p.m. EDT (1731 GMT).

·         U.S. gold futures settled up 0.2% at $1,780.70.

·         SPDR GOLD HOLDINGS:

 

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 2.91 tonnes to 1045.78 tonnes on Monday.

 

·         Gold suffered its biggest intraday drop in five months after the Fed signaled earlier than expected policy tightening on June 16.

 

·         The S&P 500 and the Nasdaq hit record levels, limiting bullion’s gains.

 

·         There are growing concerns about the spread of the Delta variant of the coronavirus, which is bringing back a slight bid into the gold market from a safe-haven perspective, said David Meger, director of metals trading at High Ridge Futures.

“Although, no rallies continue to follow through because of the recent set of rhetoric in regards to the potential for reducing asset purchases (by the U.S. Fed).”

“That takes some of the wind out of the sails of the gold market, and the reason why we saw gold fall below $1,800 level recently was based on that,” Meger added.

·         Investors are looking to U.S. non-farm payrolls data on Friday.

 

·         The potential for a stronger jobs report this week could inhibit positive flows into gold for now, TD Securities wrote in a note.

“In this context, gold is not completely out of the woods just yet, with another leg lower toward the $1,730 per ounce region opening the door to another round of CTA (Commodity Trading Advisor) selling.”

 

·         Russia's largest gold miner plans to boost production

Russia's largest gold miner Polyus says it is planning to increase supply in 2022. The world's 4th largest miner has suffered a current slowdown in the output. This was caused by the decline in the quality of the ore extracted from the mines, but Polyus hopes to recover from the drop in the coming years.

"The essence of our short-term strategy is providing an increase in production while maintaining costs" said Polyus' CEO Pavel Grachev.

The firm expects its total cash cost to stay flat next year at $425-$450 per ounce of gold, the lowest level globally. It may decline to as low as $400 in 2023.

Looking at the daily price chart the price has moved into a consolidation zone.

As long as the price stays above there it could recover and the red zone could be taken out. For now, the consolidation range looks firm and a break either side could give us clues on the future trajectory for the company's share price.

 

·         Elsewhere, silver rose 0.1% to $26.09 per ounce.

·         Platinum slid 1.4% to $1,095.70.

·         Palladium gained 1.6% to $2,679.92.

·         CORONAVIRUS UPDATES

 

·         US 10-year real yields above 1.50% supports the upside – OCBC

 

·         Yields tumble as market readies for U.S. jobs report

 

·         Dollar edges higher as investors await U.S. payrolls

·             Fed Vice Chair Quarles casts significant doubt on establishing a digital dollar

With the Federal Reserve set to release a much-anticipated report this summer on the potential creation of a digital dollar, the central bank’s vice chair for supervision said Monday that he has significant doubts about the idea.

Fed Governor Randal Quarles expressed skepticism about most arguments made in favor of a central bank digital currency.

 

·         NY Fed's Williams says major questions need to addressed as digital currencies emerge

Several major questions need to be addressed as payments technology advances and more central banks and other entities consider issuing digital currencies, New York Federal Reserve Bank President John Williams said on Monday.

For example, as new digital currencies are introduced, policymakers need to decide how the new technology would be regulated and how digital currencies would work alongside physical cash, Williams said during a panel organized by the Bank for International Settlements.

 

·         Fed's Barkin says U.S. has made "substantial further progress" on inflation goal

 The U.S. Federal Reserve has made “substantial further progress” toward its inflation goal in order to begin tapering asset purchases, Federal Reserve Bank of Richmond President Thomas Barkin said on Monday, as he indicated U.S. employment numbers may soon follow.

“It’s pretty clear to me we have had substantial further progress against our inflation goal,” Barkin said during an event at the Rotary Club of Atlanta. “I’m pretty optimistic about the labor market. ... If the labor market opens as I suggested it might, then I think we’re going to get there in relatively short order.”

 

·         Morgan Stanley doubles its dividend as most banks raise payouts following Fed stress tests

Wall Street banks hike shareholder payouts after Fed gives the green light

 

El-Erian says the Fed is behind on inflation and risks another recession if it is forced to catch up

Federal Reserve officials are underestimating inflation and risking that the U.S. could fall into another recession, Mohamed El-Erian, chief economic advisor at Allianz, told CNBC on Monday.

 

·         Republicans Senate negotiators ready to move forward on infrastructure after Biden walkback

Republican Senate negotiators on an infrastructure deal were optimistic about a $1.2 trillion bipartisan bill on Sunday after President Joe Biden withdrew his threat to veto the measure unless a separate Democratic spending plan also passes Congress.

 

·         McConnell ups pressure on Biden, Democrats over U.S. infrastructure

 

·         U.S. Commerce chief urges Congress to act on chip funding by August

 

·         China’s aggressive behavior on the global stage is an ‘immense danger,’ says analyst

As the Chinese Communist Party celebrates the 100th year since its founding this week, an analyst has warned of the “immense danger” from Beijing’s increasing aggression on the global stage.

Orville Schell, the Arthur Ross director of Asia Society’s Center on U.S.-China Relations, said China’s aggression — coupled with the rise of its military — could result in a “military accident, even a military clash.”

 

 

·         Survey finds signs of creeping caution among Chinese consumers and businesses

Chinese businesses and consumers are not as optimistic on the economy as overall data might indicate, according to an independent study by the China Beige Book released Tuesday.

In its latest quarterly survey, the U.S.-based firm found that a measure of Chinese corporate borrowing fell to its lowest in the study’s history, and that expectations for loan demand in the next half year dropped — despite low interest rates.

Of particular concern, the number of retailers taking out loans fell to a record low, the report said.

 

·         Biden vows to Israel: No nuclear weapon for Iran on my watch

 

·         Biden’s airstrikes send a clear message amid Iran deal talks — but are unlikely to derail them, analysts say

 

·         U.S. troops come under fire in Syria after strikes against Iran-backed militias