· Gold rose above the $1,800/ounce psychological level on Tuesday to hit a three-week high, as a pullback in the dollar lifted bullion demand, while investors awaited minutes from the U.S. Federal Reserve’s June meeting for clarity on monetary policy.
· Spot gold climbed 0.7% to $1,804.50 per ounce by 0652 GMT, after touching its highest level since June 17.
· U.S. gold futures jumped 1.3% to $1,806.30 per ounce.
· “It’s mainly a weakening U.S. dollar that is boosting gold prices. Gold was sold down heavily after the June FOMC meeting and now that expectations have been priced in, buyers are back to the market,” said Margaret Yang, a strategist at DailyFX.
· “However, gold’s upside potential might be limited against the backdrop of global hawkish turn in monetary policies. Don’t think prices will recover back to the early June levels anytime soon.”
· The dollar weakened 0.2%, moving further away from a three-month high hit last week, making gold less expensive for other currency holders.
· Focus this week is on minutes from the Fed’s latest meeting due out on Wednesday, after a hawkish tilt from the U.S. central bank last month in which policymakers projected a start to rate hikes in 2023, sending gold prices below the $1,800 level.
· “Gold prices may be able to hold onto recent gains but staying above the $1,800 resistance may not be in the traders’ radar until the latest minutes of the Fed’s meeting is released,” Avtar Sandu, senior commodities manager at Phillip Futures, said in a note.
· Australia’s central bank left its cash rate at a record low of 0.1% and said it was likely to remain there until 2024, though it did pare back its bond-buying campaign.
· Elsewhere, silver rose 0.6% to $26.61 per ounce, palladium gained 0.2% to $2,818.22, and platinum climbed 1.3% to $1,110.98.
· Gold Price Forecast: XAU/USD jumps to fresh three-week tops, around $1,810 area
Gold continued scaling higher through the first half of the European session and shot to near three-week tops, around the $1,809 region in the last hour. The XAU/USD built on its recent strong rebound from the $1,750 area, or the lowest level since mid-April and gained positive traction for the fifth consecutive session on Tuesday. Concerns about the spread of the highly contagious Delta variant of the coronavirus continued weighing on investors' sentiment and acted as a tailwind for traditional safe-haven assets, including gold.
Apart from this, the prevalent selling bias surrounding the US dollar was seen as another factor that provided an additional boost to the dollar-denominated commodity. An unexpected rise in the US unemployment rate overshadowed a big beat from the headline NFP print and calmed market fears about an earlier policy tightening by the Fed. Hence, the key focus will remain on Wednesday's release of the FOMC June meeting minutes. Investors will look for clues about the Fed's monetary policy outlook, which, in turn, will influence the non-yielding gold.
Meanwhile, Tuesday's strong move up could further be attributed to some technical buying on a sustained move beyond the $1,795 horizontal resistance. A subsequent move beyond the $1,800 mark might have already set the stage for additional gains. Market participants now look forward to the US economic docket, highlighting the release of the ISM Services PMI for some impetus later during the early North American session. Apart from this, the broader market risk sentiment and the USD price dynamics might further contribute to produce some short-term trading opportunities around gold.
Gold: Technical Outlook
Daily closing above the 100-Daily Moving Average (DMA) at $1790 on Monday has reinforced the bullish commitments, with the bulls now target the bearish 21-DMA at $1809. To unleash additional upside, gold price needs acceptance above $1800, which would then confirm a bullish reversal from two-month troughs of $1751.
Central banks are dipping into the gold market again
· The Bank of Ghana to implement a Gold Purchase Programme designed to purchase locally-produced gold.
Vice President Bawumia said the benefits of having a healthy amount of physical gold in a country's reserves are varied and enormous, including shoring up the value of the local currency. The BoG decision, he indicated, is a "game-changer.".
· The National Bank of Serbia said, "Long term, gold is the most significant guardian and guarantor of protection against inflationary and other forms of financial risks,".
Serbian President Aleksandar Vucic recently announced the central bank intends to boost holdings of the precious metal to 50 tons from 36.3 tons.
· Thailand was the biggest buyer, adding a further 46.7t in May and accounting for a whopping 82% of total net purchases for the month.
· Turkey also increased its gold reserves by 8.6t during the month, bringing official sector reserves to 415t.
· Brazil increased gold reserves by 11.9t, its first addition since November 2012.
Gold reserves now stand at 79.3t (1% of total reserves) which is the highest level since November 2000.
· Kazakhstan (5.3t), Poland (1.9t), and India (0.9t) were the other notable buyers during the month
· Looking at investment bank commentary James Steel, chief precious metals analyst at HSBC "If a central bank is looking at diversifying, gold is a marvelous way of moving out of the dollar without selecting another currency,".
· The World Gold Council (WGC) said following a higher level of monthly net purchases in March and April, our latest data published today shows that this trend continued into May. Central banks net purchases totaled a healthy 56.7t during the month, down 11% M/M but 43% above the YTD monthly average.
· Pakistan starts monitoring selling and buying of gold
Pakistani jewelers are unhappy as the country has decided to strictly monitor the purchase and sale of gold.
The premier of Australia's New South Wales (NSW) said on Tuesday she aims to decide within the next 24 hours whether to extend a COVID-19 lockdown in Sydney that is due to end on Friday as new infections dropped in the country's most populous state.
· Morgan Stanley says the pressure on inflation and interest rates ‘still exists’
Morgan Stanley Investment Management’s Andrew Harmstone says it’s important to pay attention to the “reaction to inflation” by the central banks, particularly from the Federal Reserve.
· Up to 1,500 businesses affected by ransomware attack, U.S. firm's CEO says
· Japan's May household spending growth slows from previous month
Japan's household spending rose at a double-digit rate in May as consumers bought cars and mobile phones, though the pace of growth slowed from the prior month as a new wave of COVID-19 infections weighed on consumer confidence.
Japan's economy is struggling to shake off the drag from the coronavirus pandemic after the government put in place "quasi-emergency" measures in Tokyo and other major areas to curb a resurgence of infections.
Household spending grew 11.6% year-on-year in May, the third month of gains, after a 13.0% rise in April, government data showed on Tuesday. That was stronger than a median market forecast for a 10.9% gain in a Reuters poll.
· Covid resurgence in parts of Asia drags down consumer spending
As consumer spending in China continues to lag in its economic recovery from the pandemic, a similar weakness in retail sales is being witnessed elsewhere in Asia.
Meanwhile, waves of resurgence elsewhere in Asia likely had a negative impact on consumer sentiment as well as mobility, said Taimur Baig, chief economist at Singapore’s DBS Bank.
· Singapore targets 75% vaccination so border restrictions can be gradually eased
Singapore aims to immunize 75% of its population by early October and at least two-thirds by Aug. 9, Trade Minister Gan Kim Yong told CNBC on Tuesday.
· German workers on short-time work falls to lowest level since Feb 2020
The number of employees put on short-time work schemes in Germany fell to 1.5 million people in June, the lowest level since February 2020, as easing COVID-19 restrictions boosted demand for jobs, the Ifo institute said on Tuesday.
This represented 4.5% of overall employees after 6.8% in May, Ifo said, adding that the estimate was based on a business survey and data from the Federal Labour Office.
· German industrial orders fall unexpectedly in May
Orders for German-made goods dropped unexpectedly in May, data showed on Tuesday, hurt by weaker demand from countries outside the euro-zone and fewer contracts for capital and intermediate goods.
The data published by the Federal Statistics Offices showed orders for industrial goods fell by 3.7% on the month in seasonally adjusted terms.
This confounded a Reuters forecast of a 1% rise and came after an upwardly revised increase of 1.2 in April.
· German industrial orders fall unexpectedly in May
Orders for German-made goods posted their sharpest slump in May since the first lockdown in 2020, data showed on Tuesday, hurt by weaker demand from countries outside the euro zone and fewer contracts for machinery and intermediate goods.
The data published by the Federal Statistics Office showed orders for industrial goods fell by 3.7% on the month in seasonally adjusted terms, marking the first drop in new business this year.
This confounded a Reuters forecast of a 1% rise and came after an upwardly revised increase of 1.2% in April.
A breakdown of the data showed that foreign demand fell by 6.7%, with orders from outside the euro zone tumbling 9.3%. Domestic demand rose by 0.9%.
· Germany set to ease for travel restrictions for UK, India, others
The German government will soften coronavirus travel rules for travelers from Britain and four other countries. It means shorter or no quarantine time depending on your vaccination status.
Travelers from the UK to Germany will face softer quarantine restrictions, after altered recommendations from the German public health agency the Robert Koch Institute published on Monday. Portugal, Russia, India and Nepal have also been downgraded.
· UK inflation jump seen as temporary, but risks to debt are growing-OBR
Britain’s recent increase in inflation is expected to be temporary but the country’s 2 trillion-pound debt mountain is becoming more exposed to inflation shocks, Richard Hughes, chairman of the Office for Budget Responsibility said.
· Sydney COVID lockdown call looms as new case numbers drop
· Rural India sinks deeper into debt as COVID-19 wipes out work
· Malaysia's central bank seen holding key rate amid extended lockdown: Reuters poll
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