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Gold firmed above $1,800 an ounce on Wednesday as U.S. Treasury yields declined after minutes from the Federal Reserve’s June meeting showed officials felt its ‘substantial progress’ goal on economic recovery has not yet been met.

·         Spot gold extended gains slightly post the release of the minutes and was up 0.4% to $1,804.16 per ounce by 2:36 p.m. ET, having hit its highest since June 17 at $1,814.78 on Tuesday.

 

·         U.S. gold futures settled 0.4% higher at $1,802.10 per ounce.

 

·         SPDR Gold Holdings:

 

·         Gold extended gains above $1,800, “as the minutes were broadly in line with market expectations, rather than presenting additional hawkish surprises,” said Suki Cooper, an analyst at Standard Chartered.

 

“The threshold for tapering has yet to be met and the rise in inflation largely reflects temporary factors,” and the resultant weakness in yields have contributed to gold’s upside, Cooper added.

 

Fed officials last month felt that substantial further progress on the economic recovery “was generally seen as not having yet been met,” though participants expected progress to continue.

 

·         A surprise hawkish tilt by the U.S. central bank last month caused gold to slump 7% in June.

 

·         Meanwhile, benchmark 10-year Treasury yields hit their lowest in more than four months.

 

·         Gold is highly sensitive to rising U.S. interest rates, which increase the opportunity cost of holding non-interest bearing bullion.

 

·         “Rising uncertainty around monetary policies, inflation and increasing risk of equity market volatility should favor safe-haven gold demand,” ANZ analysts said in a note.

 

“Central banks have increased gold purchases in recent months, offsetting some of the physical demand losses in Q2 2021.”

 

·         Elsewhere, silver steadied around $26.14 per ounce

·         Platinum eased 0.5% to $1,086.32.

·         Palladium climbed 2.6% to $2,865.27.

  

·         U.S. dollar little changed following Fed minutes

The dollar was slightly higher on Wednesday after the release of the minutes of the U.S. Federal Reserve’s latest policy meeting, which showed Fed officials wrestling with the onset of inflation and financial stability concerns but included no big surprises.

The dollar index, which measures the greenback against a basket of peer currencies, was up 0.135% at 92.664, consolidating near its recent 3-month high, even as U.S. bond yields fell to their lowest levels since February.

The euro touched a three-month low against the dollar on Wednesday after German data raised doubts about the strength of the economic recovery.

The European single currency changed hands at $1.18035 , having earlier touched a three-month low of $1.17815.

 

·         U.S. Treasury Yields Extend Steep Decline

Yield on 10-year hits multimonth lows, highlighting concerns about the prospects for growth

 

Yields on U.S. government bonds reached fresh multimonth lows on Wednesday, reflecting investors’ anxiety about the economic outlook and new concerns about the highly contagious Delta variant of Covid-19.

·         10-year Treasury yield deepens slide to February lows as Fed signals readiness to taper

The 10-year note registered its lowest close since Feb. 18, while the 30-year touched its lowest rate, on a 3 p.m. ET basis, since Feb. 10.

The 10-year Treasury note rate TMUBMUSD10Y, 1.305% was at 1.321%, hitting an intraday low at 1.285%, compared with 1.369% at 3 p.m. ET, hanging around its lowest levels since February. Yields for debt fall as prices rise.

The 30-year Treasury bond TMUBMUSD30Y, 1.922% was yielding 1.943%, versus 2.003% a day ago, and trading near its lowest since around February.

 

·         Reflation rethink sends bond markets into a spin

An economy powering back from the COVID-19 shock and resurgent inflation is yesterday's story if the sharp rally in the world's biggest bond markets in the last 24 hours is anything to go by.

Prices on U.S. 10-year Treasuries have shot up, pushing yields down 8 basis points on Tuesday in their second biggest daily drop of 2021. The rally accelerated on Wednesday, with yields falling to just below 1.3%, their lowest in over four months.

British gilt yields fell to a similar low while German Bund yields -- which looked set to push above 0% in May -- have dropped to -0.3%.

Various explanations have been proffered: a squeeze on investors who had bet on yields rising, softer-than-expected economic data and concern about COVID variants.

 

·         Biden promotes corporate taxes in Illinois as business opposition mounts

 

·         Fed officials kept a patient tone in terms of tightening monetary policy, minutes show and keen to be 'well positioned' to act on inflation, other risks, minutes show

Federal Reserve officials last month felt substantial further progress on the U.S. economic recovery "was generally seen as not having yet been met," but agreed they should be poised to act if inflation or other risks materialized, according to the minutes of the central bank's June policy meeting.

 

·         Fed's Bostic: Infection spike due to Delta variant could slow recovery

A new rise in coronavirus infections driven by the more virulent Delta variant could cause consumers to “pull back” and slow the U.S. recovery, Atlanta Federal Reserve President Raphael Bostic said, adding trends in some parts of the country were “troubling.”

 

 

·         CORONAVIRUS UPDATES:

 

 

·         CDC data shows highly transmissible delta variant is now the dominant Covid strain in the U.S.

 

·         Delta variant already dominant in U.S., CDC estimates show

The Delta variant is already the dominant strain of COVID-19 in the United States, according to data modeling done by the U.S. Centers for Disease Control and Prevention (CDC).

According to the health agency's estimates the Delta variant became dominant in the country over the two weeks ended July 3, with 51.7% cases linked to the variant that was first identified in India.

The proportion of cases linked to the Alpha variant which was first identified in Britain and had been dominant in the United States so far, fell to 28.7%.

 

·         UK's post-lockdown hiring boom hits record pace - REC

 

·         WHO urges extreme caution against completely lifting public health measures