Gold was little changed on Tuesday as a firmer dollar offset support from bets that the Federal Reserve was unlikely to respond with immediate monetary tightening after U.S. consumer prices rose by the most in 13 years last month.
· Spot gold was steady at $1,806.64 per ounce by 2:11 p.m. ET.
· U.S. gold futures settled up 0.2% at $1,809.90.
· The closely-watched U.S. consumer price index (CPI) increased 0.9% last month, compared with a forecast for a 0.5% uptick by economists polled by Reuters.
But analysts said the data was unlikely to trigger a swift monetary policy tightening response from the Fed, providing some support to gold.
· “It’s going to take a string of these hotter numbers on the inflation readings to move the needle for the Fed. One month’s reading is not going to do it,” said Jim Wyckoff, senior analyst with Kitco Metals, adding that the Fed would also take employment and growth readings into account.
Still, markets will now eye Fed Chairman Jerome Powell’s testimony before Congress on Wednesday and Thursday for any hints on the central bank’s monetary policy outlook.
· “With the cost of transport also rising and oil prices remaining elevated, there is a risk that inflation could remain stubbornly high for longer than the Fed envisages,” said Fawad Razaqzada, analyst with ThinkMarkets.
“If the current trend for inflation continues, then surely the central bank will have to react and sooner,” he added.
The dollar index climbed 0.5% against its rivals, denting gold’s appeal to holders of other currencies.
· Elsewhere, palladium eased 1% to $2,828.93 an ounce.
· Platinum fell 1.1% to $1,105.77.
· Silver shed 0.8% to $25.97 an ounce.
· Dollar rises as U.S. data shows inflation running hot
The dollar index, which measures the greenback against a basket of six currencies, was 0.59% higher at 92.762, its highest since July 8.
The index is just shy of the three-month high of 92.844 touched last week.
· U.S. consumer prices post largest gain in 13 years; inflation has likely peaked
U.S. consumer prices increased by the most in 13 years in June amid supply constraints and a continued rebound in the costs of travel-related services from pandemic-depressed levels as the economic recovery gathered momentum.
Economists continued to believe that higher inflation was transitory, aligning with Federal Reserve Chair Jerome Powell's long-standing views.
· Fed’s Mary Daly says tapering of bond purchases may start this year
San Francisco Federal Reserve President Mary Daly told CNBC on Tuesday that a strong economic recovery will allow the central bank to slow its asset purchases, possibly near the end of 2021.
Markets have been looking for clearer guidance from the Fed on when it will begin to reduce, or taper, the minimum $120 billion it is buying in Treasurys and mortgage-backed securities.
While Daly did not give an exact timeline, she said the time for tapering is drawing near.
· Fed Chair Powell charged with convincing Congress this week that easy policy is still needed
Federal Reserve Chairman Jerome Powell is tasked this week with convincing Congress that the ultra-easy policies the central bank has followed during the pandemic are still the right ones.
It might not be such an easy task this time around.
· U.S. warns businesses connected to China’s Xinjiang region run ‘high risk’ of violating law
· Goldman CEO David Solomon says China’s crackdown on tech companies will delay many U.S. listings
Goldman Sachs CEO David Solomon said that China’s recent moves boosting oversight of its technology industry surprised him and will likely delay “a large number” of companies from listing shares in the U.S.
· Singapore’s economy roars back with a 14.3% surge in the second quarter from a year ago
· ECB to launch digital euro project
The European Central Bank is set to give the green light on Wednesday to a multi-year project to create a digital version of the euro.
· U.S., UK trade chiefs meet, agree to strengthen bilateral ties
· Oil rises on expectations of U.S. crude oil stocks falling
Oil rose on Tuesday, recovering from the previous day’s drop, as expectations of further declines in U.S. crude inventories outweighed fears that spreading Covid-19 variants could derail a global economic recovery.
Brent crude for September climbed 8 cents, or 0.1%, to $75.24 per barrel, after losing 0.5% on Monday. U.S. West Texas Intermediate crude for August was at $73.93 a barrel, down 17 cents, or 0.2%, having fallen 0.6% the previous day.
· CORONAVIRUS UPDATES:
· Delta variant’s surge brings new uncertainty to the economic recovery
The rapid spread of the delta variant has clouded the growth outlook, strategists are warning, but it’s too soon to tell how markets will react.
France, the Netherlands and Spain announced new restrictions on Monday in a bid to curb surging cases of the highly transmissible variant, while the U.K. has committed to taking a leap of faith and lifting its final phase of Covid restrictions on July 19, despite rising cases.
Reference: CNBC, Reuters, Worldometers
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