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Gold heads for third weekly gain rise on lower yields and virus woes

 

·         Gold edged higher in choppy trade on Friday and was set for a third straight weekly gain as concerns over the fast-spreading Delta variant of COVID-19 and a drop in U.S. Treasury yields lifted the safe-haven metal’s allure.

 

·         Spot gold was up 0.1% at $1,803.92 an ounce by 0725 GMT, up 0.9% on the week. U.S. gold futures rose 0.1% to $1,802.10.

 

·         Lower bond yields and concern over the COVID-19 Delta variant’s potential impact on global growth are helping gold, said Stephen Innes, managing partner at SPI Asset Management.

 

·         “However, the dollar is holding up to a large degree and I think that in itself is limiting gold’s move,” he added.

 

·         Benchmark U.S. 10-year Treasury yields languished near a more than four-month low while the U.S. dollar rose 0.1% towards a three-month high hit in the previous session.

 

·         Sentiment in wider equity markets remained fragile as the Delta variant threatened global economic recovery, sending Asian shares to a two-month low.

 

·         Minutes from the U.S. Federal Reserve’s June policy meeting released on Wednesday showed that while the economic recovery “was generally seen as not having yet been met”, Fed officials agreed they should be poised to act if inflation or other risks materialised.

 

·         Fears over imminent monetary policy tightening by the Fed have weighed on bullion, sending gold down 7% in June.

 

·         “The key psychological $1,800/ounce level is acting as a barrier for gold. Once it sustains above that for some time, we could see some fresh technical buying,” said Harshal Barot, a senior research consultant for South Asia at Metals Focus.

 

·         Elsewhere, palladium edged 0.1% higher to $2,809.18 an ounce while platinum was steady at $1,075.02. Silver eased 0.1% to $25.88, on course for a weekly decline.

 

·         Fed's Daly says low vaccination rates a risk to global economy - FT

Low vaccination rates in some regions of the world pose a threat to the United States and global growth, Federal Reserve's Mary Daly told the Financial Times on.ft.com/3e22TgK, adding that the central bank was fully committed to eliminating shortfalls in employment.

Daly, president of the Federal Reserve Bank of San Francisco, said it was important for the rest of the world to reach higher rates of vaccination, and the inability to achieve that would be a “headwind” on U.S. economic growth.

 

·         Will see gradual resumption of higher rates: Nuveen’s Rodriguez

Tony Rodriguez, Nuveen head of fixed income strategy, joins ‘Closing Bell’ to discuss the fall of the U.S. 10-year Treasury yield and his market outlook for the rest of the year.

 

·         Tax reform tops agenda as G20 finance chiefs meet in Venice

Finance ministers and central bankers from the group of 20 rich countries will meet face to face on Friday for the first time since the start of the COVID-19 pandemic at a gathering in Venice where corporate tax reform will top the agenda.

 

·         China's factory gate inflation slows, outlook dimmed by still-elevated prices

Friday’s data from the National Bureau of Statistics (NBS) showed the producer price index (PPI) increased 8.8% from a year earlier, compared with a 9.0% rise in May, and in line with analysts’ expectations in a Reuters poll.

 

·         China's auto sales down 12.4% in June - industry association

Auto sales in China, the world’s biggest car market, fell 12.4% in June from the corresponding month a year earlier, industry data showed on Friday.

Overall sales stood at 2.02 million vehicles in June, data from the China Association of Automobile Manufacturers (CAAM) showed.

 

·         China’s Ministry of Commerce plans to scrutinize foreign investment more closely

 

·         Five years after South China Sea ruling, China's presence around Philippines growing

 

 

·         UK economy grew by slower-than expected 0.8% in May

Britain’s economy grew by a slower-than expected 0.8% in May from April, official data showed on Friday.

 

·         New ECB policy will not try to make up for lost inflation: Weidmann

The European Central Bank will not try to make up for lost inflation after periods of anaemic price growth and will not strive to overshoot its new 2% target, German central bank chief Jens Weidmann said on Friday.

 

The ECB unveiled a new strategy on Thursday which set its inflation target at 2%, ditching a previous goal of “below but close to 2%”, seen as a clumsy and ambiguous formulation.

 

While the ECB said it may at times exceed this target, Weidmann said this will not be a goal.

 

·         Germany plans to declare all of Spain a coronavirus risk area, the Funke group of newspapers reported on Thursday, citing government officials, meaning tourists and returning Germans would need to present a negative test to avoid going into quarantine.

 

 

·         S. Korea to impose toughest Level 4 distancing scheme in greater Seoul area amid virus resurgence

South Korea announced Friday it will place the greater Seoul area under the toughest social distancing rules of Level 4 as concerns of a fourth wave of new COVID-19 outbreaks over the summer grow stronger.

 

·         Pfizer says it is developing a Covid booster shot to target the highly transmissible delta variant

 

 

Reference: Reuters, CNBC