Gold prices firm as rate-hike bets ebb, Fed minutes loom
· Gold held firm below a two-week high on Monday, as concerns eased over an earlier-than-expected rate hike by the Federal Reserve after a mixed bag of U.S. jobs data, while focus shifted to minutes from the U.S. central bank’s June policy meeting.
· Higher interest rates translate into a reduced opportunity cost of holding bullion, which pays no interest.
· Spot gold was up 0.1% at $1,788.60 per ounce, as of 0649 GMT, after hitting its highest since June 18 at $1,794.86 on Friday. Most U.S. markets were closed on Monday for the Independence Day holiday.
· U.S. gold futures rose 0.3% to $1,788.50.
· “Last week’s payroll numbers provided a lot of mixed signals and the data wasn’t solid enough to move that Fed needle,” Stephen Innes, managing partner at SPI Asset Management, said.
· “However, economic growth in the United States is quite strong, inflation is quite strong … We have to be very cognizant as markets are still playing a hawkish Fed hand and this is going to limit gold topside ambitions.”
· Data on Friday showed U.S. companies in June hired the most workers in 10 months, but unemployment ticked higher, workforce participation didn’t budge and the pace of hourly earnings growth slowed.
· Meanwhile, a rebound in the U.S. labor market is strengthening investors’ focus on economic data and the Fed’s next move, as markets cheer further evidence of a robust economic recovery amid worries over persistent inflation.
· Minutes of the Fed’s latest meeting due to be published on Wednesday could shed more light on policymakers’ views on inflation and monetary policy.
· Spot gold may break a resistance at $1,789 per ounce and rise to $1,813，as suggested by its wave pattern and retracement analysis, said Reuters technical analyst Wang Tao.
· Gold price to recover most of its recent losses, says TD Securities
After seeing the worst month in more than four years, gold can still recover most of its losses, according to TD Securities.
The hawkish Federal Reserve was to blame for a reversal of the bullish sentiment in gold built up through April and May.
"Just as gold rebounded over $200/oz from the late-March lows to trade in the $1,900/oz territory during early-June and market chatter turned bullish again, there was a significant Federal Reserve-driven reversal," said TD Securities head of commodity strategy Bart Melek.
The markets were caught off guard by the Fed admitting to stronger-than-expected inflation expectations and a possibility of two rate hikes as soon as 2013.
"As the yellow metal plunged back into the $1,770s/oz range in the days immediately after the June FOMC economic projections were released, the market delivered a sobering reminder to investors and analysts that the path to new highs is almost never a smooth one. A similar object lesson in market realities was also given to silver, platinum and palladium investors," Melek said.
But precious metals investors should not give up on gold just yet. With the Fed focused on achieving full employment before it can raise rates, gold has the time to make up for its losses, according to TD Securities.
· After the worst June since 2013, is gold price ready to rebound?
After dropping more than 7% in June, gold is trying to rebound. Can the precious metal see $1,800 an ounce breached next week as higher inflation continues to worry industry experts? Here's a look at Kitco's top three stories of the week:
1. Higher inflation for the next 5 years: 'be overweight stocks, gold, and commodities,' says WisdomTree's research head
2. Is recession next? El-Erian is concerned the 'Fed is falling behind' on inflation story
3. Gold saw its worst June since 2013
· Gold Price Forecast: XAU/USD set to retest the $1800 mark
Gold price takes a breather after the recent rally, as focus shifts to Fed minutes. In the view of FXStreet’s Dhwani Mehta, XAU/USD is set to eye further upside above the $1795-$1797 region.
Investors reassess Fed’s hawkish moves
“Gold price is struggling below the 100-DMA barrier at $1790 this Monday, partly lagged by the broad-based US dollar rebound, as investors reassess the odds for the Fed’s hawkish hand ahead of this week’s FOMC minutes.”
“In the day ahead, the dollar’s dynamics and broader market sentiment will influence gold price action, as traders brace for the US ISM Services PMI for fresh near-term trading opportunities.”
“XAU/USD is flat-lined below a horizontal trendline resistance at $1795. Just above that level, a downward sloping 100-Simple Moving Average (SMA) at $1798 appears. Therefore, gold bulls need a decisive break above the said resistance zone, in order to extend its recent upbeat momentum to challenge $1800.”
“Acceptance above the $1800 round figure will expose the next resistance at $1812, June 17 high.”
“Immediate support is seen at the 21 and 50-SMAs confluence, now at $1776. Sellers will then target the static support at $1770. Further down, bears could challenge the two-month lows of $1751 reached last week.”
· Gold Price Forecast: XAU/USD steadies near $1,790 amid mixed concerns, US off
Gold (XAU/USD) prices remain sidelined, recently picking up bids, around $1,787 as European traders brace for Monday’s bell. The yellow metal rose for three consecutive days the last before recently battling the key moving average, namely 100-DMA, amid subdued markets.
Even so, hopes of the economic recovery from the pandemic and the US dollar’s latest pullback keep gold buyers hopeful amid a quiet session and an extended holiday in the US. Also supporting the precious metal could be the Bloomberg analysis suggesting, “Central banks may be regaining their appetite for buying gold after staying on the sidelines for the past year.”
Technical analysis
Gold’s recovery from mid-April lows confronts the 100-DMA upside hurdle around $1,790 ahead of a six-week-old horizontal area surrounding $1,798–99.
It’s worth noting that the $1,800 threshold and the mid-May low close to $1,808 add to the upside filters.
MACD conditions also justify the bullish momentum hopes, as the MACD line is up for crossing the signal line, suggesting the upside moves going forward.
Even if the quote fails to cross the nearby resistances, the pullback moves will have strong support surrounding $1,755, comprising multiple levels since March 18, to recall the gold bears.
Additionally, March month’s double bottom surrounding $1,676-78 also become the key challenge to the metal’s downside.
· Elsewhere, silver rose 0.3% to $26.54 per ounce, palladium gained 0.2% to $2,791.52, and platinum climbed 0.7% to $1,097.15.
· Celebrating nation's birth, Biden urges Americans to help end COVID-19 pandemic
U.S. President Joe Biden celebrated the nation's 245th birthday on Sunday by opening the gates of the White House and calling on Americans to do their part to end the COVID-19 pandemic once and for all.
· Support for Biden erodes among Democrats as U.S. looks past pandemic
U.S. President Joe Biden has seen an erosion in support since April, mainly from fellow Democrats, as his administration wrestles with Congress to make good on campaign promises and more Americans worry about an uneven economic recovery, Reuters/Ipsos polling shows.
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· Growth in China's June services activity falls to 14-month low: Caixin PMI
Growth in China’s services sector slowed sharply in June to a 14-month low, weighed down by a resurgence of COVID-19 cases in southern China, a private survey showed on Monday, adding to concerns the world’s second-largest economy may be starting to lose some momentum.
The Caixin/Markit services Purchasing Managers’ Index (PMI) fell to 50.3 in June, the lowest since April 2020 and down significantly from 55.1 in May. It held just above the 50-mark, which separates growth from contraction on a monthly basis.
· China’s economy sees new pockets of growth in rising shopping trends
· Japan's service sector activity contracts for 17th month as pick-up stalls
Japan's services sector activity shrank for the 17th straight month in June as the coronavirus dampened demand at home and abroad, underscoring sluggish momentum for the world's third-largest economy.
The decline in the services industry kept overall private-sector activity in contraction for a second month, in a sign the country's economic recovery struggles to pick up despite making progress with a coronavirus vaccine rollout.
The final au Jibun Bank Japan Services Purchasing Managers' Index (PMI) was at a seasonally adjusted 48.0, up from the prior month's final level of 46.5 and a 47.2 flash reading.
· Tokyo city assembly split as Covid cases continue to rise ahead of Olympics
The Tokyo city assembly splintered amid worries about health risks during the Olympics, opening in three weeks while coronavirus cases continue to rise.
Public opinion surveys show about 60% of respondents want the Games canceled or postponed again. Behind the fears is the lagging vaccination rollout, with only about 10% of the population fully vaccinated.
The Olympics, opening July 23, bring together 15,000 athletes and more than 50,000 officials, including corporate sponsors and dignitaries, as well as 70,000 volunteers.
· Taiwan June exports seen up for 12th month in a row: Reuters poll
Taiwan's exports likely rose for a 12th straight month in June, a Reuters poll showed, lifted by demand for electronic goods from the global economic recovery and as more people work and study from home.
The export forecasts from the poll of 12 analysts ranged widely between a rise of 20% and 42%, on uncertainties over the COVID-19 outbreak that has disrupted the global supply chain.
· As COVID-19 cases abate, Taiwan eyes easing restrictions
Taiwan's Cabinet said on Monday that with COVID-19 cases abating there is room to ease restrictions and ministries and officials should make preparations for doing so, as the island begins emerging from the worst of its pandemic.
· Euro zone business activity soared in June as lockdowns lifted
Euro zone businesses expanded activity at the fastest rate in 15 years in June as the easing of more coronavirus restrictions brought life back to the bloc’s dominant service industry, a survey showed on Monday.
But that surge in growth has come at a cost as inflationary pressures mounted due to labour shortages and disruptions to supply chains caused by the pandemic.
IHS Markit’s final composite Purchasing Managers’ Index (PMI), seen as a good gauge of economic health, jumped to 59.5 last month from May’s 57.1, its highest level since June 2006.
· UK's Johnson to set out plan for final lockdown easing on Monday
British Prime Minister Boris Johnson will set out plans for the final step of easing lockdown in England on Monday, including guidance on social distancing, face coverings and working from home, the government said.
· Home workers questioning jobs, supply-chain havoc weigh on French recovery
A shortage of qualified workers, doubts raised by working from home and supply-chain havoc are proving problematic for some companies as they try to ride France's recovery from the pandemic but struggle to fill vacancies, business leaders said.
· As COVID cases rise, Australia's New South Wales says next 2 days 'critical'
Australia's New South Wales (NSW) on Monday said the next two days would be "absolutely critical" in deciding whether a two-week anti-coronavirus lockdown in Sydney, set to end on July 9, will have to be extended amid rising Delta variant cases.
· Import rebound behind the decline in Saudi reserves, central bank chief says
A recent drop to record lows in Saudi Arabia’s foreign reserves, a measure of its ability to support its dollar-pegged currency, was partly due to a lag between import payments and export receipts, the Saudi central bank governor told Reuters.
Net foreign assets at the central bank, known as SAMA, dropped monthly by roughly $8 billion to $436 billion in April, their lowest in more than a decade, and dropped further in May, recent central bank data showed, declining to about $433 billion.
· Indonesia turns to telemedicine for COVID-19 as hospitals struggle
Indonesia will provide free telemedicine services to coronavirus patients with mild symptoms, its health minister said on Monday, in an effort to reduce pressure on a healthcare sector inundated by record numbers of COVID-19 cases.
· Iran Says It Can Quickly Boost Oil Output If Sanctions End
Iran’s Oil Minister Bijan Namdar Zanganeh said his country has taken “many measures” to ensure it can raise crude production in “a very short time” if U.S. sanctions are lifted, the state-run Shana news agency reported.
· Myanmar’s junta bans senior telecom executives from leaving country
Reference: Kitco, CNBC, Reuters
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