MTS Help Center

Gold firms near $1,800 level as U.S. bond yields drop

Gold rose on Tuesday, bouncing above the key $1,800 level at one point, bolstered by a retreat in U.S. bond yields while investors watched for minutes from the Federal Reserve’s last policy meeting to gauge interest rate trajectory.

·         Spot gold rose 0.2% to $1,794.37 per ounce by 2:13 p.m. ET, after jumping to its highest level since June 17 at $1,814.78.

 

·         U.S. gold futures settled 0.6% higher at $1,794.2.

 

·         Benchmark U.S. Treasury yields hit a near two-week trough, boosting gold’s allure as it tends to lower gold’s opportunity cost.

 

·         SPDR GOLD HOLDINGS

 

·         “What we’ve seen in the last few days is central banks are dismissing the idea of raising interest rates prematurely,” said Fawad Razaqzada, analyst with ThinkMarkets.

 

“Investors are realizing that monetary policy will remain historically very loose and that’s one of the reasons why we’re seeing bond yields go down, which is helping stabilize gold prices after falling sharply in June,” Razaqzada said.

 

·         Focus is on minutes from the Fed’s latest meeting, due 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, prompted gold to retreat below $1,800.

 

·         Gold regained some footing after data on Friday showed the U.S. unemployment rate ticked higher.

 

·         “We believe there is still mettle in the precious metals, as inflation should prove transitory, which implies that market pricing for Fed policy is too hawkish,” TD Securities said in a note.

 

“With gold already managing to hold onto its uptrend, this scenario could ultimately catalyze a return of institutional interest which could see prices firm north of $1,900/oz.”

 

·         In other metals, silver fell 1.3% to $26.10, having jumped to the highest level since June 17 at $26.76 per ounce.

·         Platinum fell 1.1% to $1,085.53.

·         Palladium shed about 0.6% to $2,797.74.

 

·         US: ISM Services PMI declines to 60.1 in June vs. 63.5 expected

Commenting on the data, "the rate of expansion in the services sector remains strong, despite the slight pullback in the rate of growth from the previous month's all-time high," said Anthony Nieves, Chair of the ISM Services Business Survey Committee. "Challenges with materials shortages, inflation, logistics and employment resources continue to be an impediment to business conditions."

 

·         U.S. lobby groups write battle plan to beat Biden tax hikes

U.S. business lobbying groups cheered a bipartisan $1.2 trillion infrastructure deal, but are gearing up to fight the corporate tax hikes looming in a separate but linked spending bill that Democrats aim to pass without Republican votes.

 

 

·         Yellen to press G20 for higher minimum corporate tax rate -U.S. Treasury

U.S. Treasury Secretary Janet Yellen will press G20 counterparts this week for a global minimum corporate tax rate above the 15% floor agreed by 130 countries last week, but a rate decision is not expected until future phases of negotiations, U.S. Treasury officials said on Tuesday.

The specific rate, and potential exemptions, are among issues still to be determined after 130 countries reached an historic agreement at a Paris-based Organisation for Economic Co-operation and Development (OECD) meeting last week. The countries outlined a global minimum tax and the reallocation of taxing rights for large, highly profitable multinational firms.

The deal is widely expected to be endorsed by G20 finance leaders when they meet on Friday and Saturday in Venice, Italy.

 

·         U.S. urges China, private sector to boost participation in G20 debt response

The United States on Tuesday urged China and the private sector to increase their participation in a G20 debt moratorium for low-income countries hammered by the COVID-19 pandemic, and a common framework for restructuring their debts.

 

·         Corporate net debt seen rising as companies spend pandemic cash piles

Global corporates' net debt will increase by as much as $600 billion this year as they start to spend some of the cash piles accumulated during the pandemic, a study by asset manager Janus Henderson said on Wednesday.

 

·         CORONAVIRUS UPDATES:

 

·         Biden zeroes in on Delta variant as U.S. nears 160 mln fully vaccinated

U.S. President Joe Biden on Tuesday encouraged Americans who have not yet been vaccinated against COVID-19 to get their shots to protect themselves from the widely-spreading, highly contagious Delta variant of the coronavirus.

Biden told reporters the United States will reach a mark of 160 million Americans being fully vaccinated by the end of this week, but he warned against complacency as the Delta variant spreads among those who have not been inoculated.

 

·         Sydney COVID-19 lockdown to be extended for another week -media reports

 

Reference: CNBC, Reuters, FXStreet, Worldometers