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Gold nudged up on Wednesday but was headed for its largest monthly decline since November 2016, as investors were wary ahead of the upcoming U.S. jobs data that could intensify fears over the U.S. Federal Reserve easing its asset purchases.

·         The dollar index gained 0.4%, making gold more expensive for other currency holders.

·         Spot gold rose 0.4% to $1,768.78 per ounce by 1:52 pm EDT (1752 GMT),

having touched its lowest since April 15 at $1,749.20 per ounce on Tuesday.

·         U.S. gold futures settled up 0.5% at $1,771.60.

 

·         Michael Matousek, head trader at U.S. Global Investors, attributed gold’s slight uptick to some bargain buying in an “oversold” market with prices having retreated as much as 8.6% from the highs hit in early June.

Gold prices have been weighed down by the Fed’s sudden hawkish shift.

Matousek said gold’s appeal as an inflation hedge would remain intact as inflation will likely persist for longer despite a more hawkish Fed.

 

·         “The dollar is rallying, the S&P 500 has consistently forged new record highs,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

Additionally, hawkish Fed officials have re-affirmed they are going to raise rates in 2023 as well as start tapering bond purchases. “These are all things gold investors hate,” Streible added.

 

·         Investors now await the U.S. Labor Department’s nonfarm payrolls due on Friday, which is expected to show a gain of 690,000 jobs in June, according to a Reuters poll.

The data follows suggestions from Federal Reserve officials that the U.S. central bank should begin tapering its asset purchase program this year.

 

·         Elsewhere, silver rose 1.2% to $26.06 an ounce.

·         Palladium was up 3.8% at $2,780.45 an ounce but was set for a second straight month of declines.

·         Platinum gained 0.6% to $1,072.91 an ounce and was set for its biggest monthly and quarterly drop since March 2020.

 

·         Lumber prices dive more than 40% in June, biggest monthly drop on record

The great lumber bubble of 2021 has popped.

After a jaw-dropping rally this spring, lumber prices have come back down to earth as supply increased, speculative trading action cooled and homebuilding demand eased. Lumber futures tanked more than 40% in June alone, suffering their worst month on record dating back to 1978. The building commodity is down more than 18% in 2021, headed for the first negative first half since 2015.

At their peak on May 7, lumber prices hit an all-time high of $1,670.50 per thousand board feet on a closing basis, which was more than six times higher than their pandemic low in April 2020.

The quick reversal of lumber’s monthslong rally came as Americans started to go on vacations again amid the economic reopening instead of taking on renovation and building projects. Many who are fearful of persistent inflation also took comfort in the drastic decline in prices in the face of cooling demand.

 

·         Fed's Kaplan says he wants taper to start 'soon,' be gradual

Federal Reserve Bank of Dallas President Robert Kaplan said Wednesday he would like the Fed to start reducing its support for the economy before the end of the year, in part to make an abrupt policy tightening less likely later on.

“I would prefer sooner” than the end of the year for reducing the Fed’s pace of asset purchases, Kaplan said on Bloomberg TV, adding that the taper should be gradual. Supply and demand balances in the labor market will likely persist, making “explosive” growth in jobs unlikely, he said, though he expects “continued improvement” in the labor market.

 

·         U.S. dollar share of global reserves rises in Q1; euro share slips

The U.S. dollar's share of currency reserves reported to the International Monetary Fund edged up to 59.5% in the first quarter of the year, from 58.9% in the previous quarter, IMF data showed on Wednesday.

The greenback remains the largest-held currency reserve by global central banks.

Global reserves, which are reported in U.S. dollars, are assets of central banks held in different currencies used primarily to support their liabilities. Central banks sometimes use reserves to help support their respective currencies.

 

·         U.S. private payrolls increase solidly; pending home sales rebound

U.S. private payrolls increased more than expected in June as companies rushed to boost production and services amid a rapidly reopening economy, though a shortage of willing workers continues to hang over the labor market recovery.

Private payrolls increased by 692,000 jobs in June. Data for May was revised lower to show 886,000 jobs added instead of the initially reported 978,000. Economists polled by Reuters had forecast private payrolls would increase by 600,000 jobs.

More than 150 million Americans have been fully vaccinated against COVID-19, allowing authorities to remove pandemic-related restrictions on businesses and mask mandates for the inoculated.

 

·         U.S. pending home sales increase to highest reading for May since 2005

The National Association of Realtors (NAR) said on Wednesday its Pending Home Sales Index, based on contracts signed last month, rose 8.0% to 114.7. Economists polled by Reuters had forecast pending home sales would decline 0.8% percent.

Compared to one year ago, pending sales were up 13.1%.

  

·         White House official urges China, private sector to step up global debt relief

The G20 major economies should revitalize a freeze in official bilateral debt payments by the poorest countries to include middle income countries and expand participation by China and the private sector, a White House official said on Wednesday.

Daleep Singh, the U.S. sherpa for the G7 and G20, said China was by far the largest official bilateral creditor, and it should step up its participation in the G20’s Debt Service Suspension Initiative (DSSI), but more private sector participation was also needed.

In April, the Group of 20 agreed to extend until the end of 2021 the debt freeze offered to the poorest countries to help them fight the COVID-19 pandemic and mitigate its economic impact, but failed to expand it to include middle-income countries, leaving out 22 of the 72 countries seen at high risk of debt distress.

The initiative has fallen far short of its initial targets, with some countries were reluctant to ask for a freeze in debt payments for fear of ruining their credit ratings.

 

·         Investors show no appetite for Chinese online grocery firms that just listed in the U.S.

 

·         Taiwan is the most dangerous flashpoint in U.S.-China relations, says former diplomat

 

·         China’s Xi at Communist Party anniversary: We won’t accept ‘sanctimonious preaching’ from others

 

·         Britain's Sunak promises to sharpen City of London's competitive edge

Britain will unveil its blueprint on Thursday for building the world’s “most advanced” financial sector after Brexit largely severed the City of London financial district from the European Union, its biggest export customer.

 

·         Deaths surge in U.S. and Canada from worst heatwave on record

 

·         Chip shortage causes Ford to slash vehicle production at several plants in July

 

·         Oil prices could skyrocket if OPEC+ fails in pledge to deliver more supply

 

·         CORONAVIRUS UPDATES:

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