Gold edged up on Thursday as a more than 7% slide in June prompted some traders to buy the metal amid concerns over the Delta variant of the coronavirus, but moves were capped by caution over Friday’s U.S. payrolls data and a strong dollar.
· Spot gold was up 0.2% to $1,773.09 per ounce by 2:22 pm EDT (1822 GMT), while U.S. gold futures settled up 0.3% at $1,776.80.
· Gold posted its biggest monthly loss since November 2016 in June, hurt by a surprise hawkish shift by the U.S. Federal Reserve. Higher interest rates tend to translate into a higher opportunity cost of holding non-yielding gold.
But some investors bought gold as a safe-haven as the Delta variant of the coronavirus spread, analysts said, with France delaying the easing of restrictions in the Landes region.
· Focus is now on Friday’s nonfarm payrolls report for clues on the timeline of the U.S. monetary policy shift, after Federal Reserve officials suggested the central bank should ease asset purchases this year. A Reuters poll forecast a gain of 690,000 jobs this month.
· Initial jobless claims dropped more than expected last week.
· SPDR GOLD HOLDINGS:
· ″(Gold) prices are in a downtrend and the bears have the overall near-term technical advantage,” said Jim Wyckoff, senior analyst with Kitco Metals, attributing gold’s uptick on Thursday to bargain hunting after it dropped to a more than two month low on Wednesday.
“For gold to turn a corner, you’re going to have see multiple closes above $1,800,” Wyckoff added.
· Gold’s advance was also kept in check by a firm dollar.
· Peter McGinn, senior market strategist at RJO Futures said that gold might need a big selloff in equity markets in order to make another push higher.
· Elsewhere, silver fell 0.5% to $25.98 per ounce, palladium dropped 0.5% to $2,764.66.
· Platinum rose 0.8% to $1,081.30.
· Dollar gains ahead of U.S. payrolls, seen higher short-term
The dollar hit three-month highs on Thursday but traded within narrow ranges as investors looked to Friday’s U.S. nonfarm payrolls report for clues on whether the Federal Reserve will start to reduce monetary stimulus sooner rather than later.
The U.S. dollar index, which measures the greenback against six major counterparts, rose to 92.602, the highest since early April. It last traded up 0.2% at 92.572.
Against the yen, the dollar hit a 15-month high of 111.640 yen, and was last up 0.4% at 111.560.
· 10-Year yield increases as jobless claims come in lower than expected
U.S. Treasury yields rose slightly on Thursday, as weekly jobless claims data came in lower than expected, a promising sign ahead of the big June jobs report Friday.
The yield on the benchmark 10-year Treasury note rose 2.6 basis points to 1.47% at 4:00 p.m. ET. The yield on the 30-year Treasury bond advanced less than a basis point to 2.071%. Yields move inversely to prices.
· Bitcoin drops over 5% to $33,226.36, Ether dropped 7.28% to $2,110.53.
· US jobless claims fall to lowest since March 2020
New applications for US unemployment benefits fell last week to the lowest since the pandemic lockdowns began, according to government data released Thursday, however the improvement came as many states cut workers off from aid.
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President Joe Biden's White House cheered the data, released on the eve of the all-important June jobs report, which is expected to show an improvement from May even as businesses nationwide complain they are struggling to find workers in the scramble to get back to normal.
The Labor Department figures showed initial jobless claims dropped by 51,000 to 364,000 for the week ended June 26, the lowest point since March 14, 2020 when the US economy shut down to combat the spreading virus.
· Traders are looking to Friday’s U.S. payrolls report for confirmation of the market’s bullish outlook.
- House passed a $715 billion proposal to fund transportation and water projects
- Bill could serve as blueprint for Biden's trillion-dollar infrastructure plan
- Biden and a bipartisan group of senators are negotiating a plan
- House bill contains money for roads, bridges, highway safety, electric vehicle charging stations, rail, transit, drinking and wastewater infrastructure
· U.S. CBO doubles growth forecast to 7.4%; sees slight drop in federal deficit
· CBO: Deficit forecast to average $1.2 trillion a year through 2031
CNBC’s Ylan Mui reports on growth and inflation expectations for the U.S. economy.
· U.S. deficit will total $3 trillion in fiscal 2021, budget panel says
The federal government will be swimming in $3 trillion of red ink by the end of fiscal 2021, according to a Congressional Budget Office estimate released Thursday that swelled 33% from the last forecast.
As a result of multiple stimulus measures aimed at combating the pandemic’s economic impact, Congress will run a budgetary shortfall this year equivalent to 13.4% of GDP, the second-largest level since 1945 and exceeded only by the 2020 spending.
The CBO last released a deficit estimate in February, when it saw a deficit $745 billion smaller than the one projected now. Under the current projections, the $23 trillion portion of government debt held by the public would bump to 103% by the end of the current fiscal year.
· Biden’s infrastructure plan would cut U.S. debt and slightly increase economic growth, Wharton study finds
A bipartisan infrastructure deal reached by President Joe Biden and a group of senators would not only add to economic growth, but also lower the national debt, according to a new study from the University of Pennsylvania’s Wharton School.
Researchers at the Wharton School said the additional $579 billion in new infrastructure spending would increase domestic output by 0.1% and decrease the U.S. debt by 0.9% by 2050.
“Over time, as the new spending declines, IRS enforcement continues, and revenue grows from higher output, the government debt declines relative to baseline by 0.4 percent and 0.9 percent in 2040 and 2050 respectively,” the Wharton team wrote.
· IMF raises U.S. 2021 growth forecast to 7%, assumes Biden spending plans pass
· 130 nations agree to support U.S. proposal for global minimum tax on corporations
· Commerce secretary dismisses Xi speech as ‘bluster,’ will push for U.S. access to China market
· U.S. calls build-up of China's nuclear arsenal 'concerning'
The United States said on Thursday China's rapid build-up of its nuclear forces was concerning and called on Beijing to engage with it "on practical measures to reduce the risks of destabilizing arms races."
The build up had become more difficult for China to hide and it appeared it was deviating from decades of nuclear strategy based around minimal deterrence, State Department spokesperson Ned Price told a regular news briefing.
· S.Korea's inflation near 9-year peak, rate hike prospects grow
South Korea’s consumer inflation in June remained below a nine-year peak and stood above 2% for a third straight month, adding pressure on policymakers to raise interest rates sooner rather than later.
Consumer prices rose 2.4% year-on-year in June, government data showed on Friday, just notches below a 2.6% increase in May when it logged the fastest growth since April 2012.
· Russia says parties to Iran nuclear talks need more time before new meeting
· Oil prices drift sideways ahead of OPEC+ meeting
Oil prices traded sideways on Thursday as investors waited for a decision from key producers on whether they would maintain or ease supply cuts in the second half of the year.
Brent crude for September edged up 1 cent to $74.63 a barrel by 0048 GMT while the U.S. West Texas Intermediate crude for August was at $73.46 a barrel, down 1 cent but near its highest since 2018 of $74.45.
WTI rose more than 10% in June while Brent added over 8%, touching highs since 2018, as summer travel picked up and more people got vaccinated. But renewed lockdowns in Asia amid the spread of a highly contagious Covid-19 variant capped demand.
· CORONAVIRUS UPDATES:
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· White House to deploy response teams across the U.S. to combat highly contagious delta Covid variant
· New Covid wave could be imminent as delta variant sweeps Europe, WHO says
· Australia national cabinet to meet amid COVID-19 vaccine turmoil
· Parts of Indonesia are running out of hospital beds as delta variant surges, health minister says
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