Gold prices firmed on Wednesday after getting a lift from weaker U.S. Treasury yields and dollar, though the main focus was on Federal Reserve Chair Jerome Powell’s testimony due later in the day following a robust rise in consumer prices.
· Spot gold was up 0.4% at $1,814.13 per ounce, as of 0639 GMT.
· U.S. gold futures rose 0.3% to $1,814.5.
· While gold has made gentle gains on the back of slightly lower U.S. dollar and yields, it has not been enough to decisively shift momentum higher, said Jeffrey Halley, a senior market analyst at OANDA.
“Gold held up surprisingly well overnight after the CPI data propelled the dollar higher and lifted long-dated bond yields. That should give some comfort to bullish investors that gold may finally be regaining its inflation hedging tailwind.”
· The dollar index ticked 0.2% lower, having seen its best daily percentage gain in nearly a month on Tuesday.
Benchmark 10-year yields also pulled back, which translates into lower opportunity cost of holding non-interest bearing gold.
· Data on Tuesday showed U.S. consumer prices in June rose by the most in 13 years. Focus now shifts to Powell’s testimony before the Congress for any views on the rising price pressures and possible tightening of monetary policy.
Powell has repeatedly stated that higher inflation will be transitory, noting that he expected supply chains to normalize and adapt.
· “I’m expecting a hawkish tone in Powell’s testimony. In that case, dollar will rise and gold will fall,” Jigar Trivedi, a commodities analyst at Mumbai-based broker Anand Rathi Shares said.
“Psychological support is at $1,800, but that will get breached very soon. I’m looking at $1,760 as a support for the next 15 days.”
· Gold prices slumped 7% last month after the U.S. central bank signalled at a sooner-than-expected interest rate increase.
· Elsewhere, silver gained 0.5% to $26.10 per ounce.
· Palladium rose 0.4% to $2,838.18.
· Platinum was 0.6% higher at $1,111.23.
· Copper eases as dollar firms on U.S. inflation jitters
Copper prices fell on Wednesday, as a firmer dollar made greenback-priced metals less appealing to holders of other currencies, while inflationary pressures in the United States sparked worries of a sooner-than-expected monetary policy.
Three-month copper on the London Metal Exchange was down 0.2% at $9,393 a tonne, as of 0609 GMT, while the most-traded August copper contract on the Shanghai Futures Exchange declined 0.5% to 68,760 yuan ($10,620.62) a tonne.
The U.S. dollar touched a three-month high versus the euro and a one-week high versus the yen, after U.S. consumer prices last month increased by the most in 13 years, spurring bets of faster monetary policy tightening than the Federal Reserve officials have so far signalled.
· Yellen, Powell to discuss hot U.S. housing market - Bloomberg News
U.S. Treasury Secretary Janet Yellen and Federal Reserve Chair Jerome Powell will discuss the hot housing market and its risks with fellow regulators on Friday, Bloomberg News reported.
The aim of the meeting would be to make sure the country is not vulnerable to a crisis similar to what happened in 2008, when the bursting of the housing bubble sent the U.S. and global economies into a deep recession, the report said.
· UK inflation leaps to 2.5% in June, highest since Aug 2018
· German retail sales seen up 1.5% in 2021 - HDE
· BOJ aimed to work with government in regional bank scheme, minutes show
The Bank of Japan’s scheme to incentivise consolidation among regional banks was meant to show it was working alongside the government to tackle problems in the country’s banking system, minutes of the deliberations showed.
The BOJ unveiled a scheme in November that pays 0.1% interest to regional banks that consolidate or take steps to boost profitability, a move critics saw as a risky deviation into industrial policy.
· Japan manufacturers' sentiment improves in July - Reuters Tankan
· Japan's factory mood in July hits highest since late 2018 - Reuters Tankan
Japanese manufacturers’ business confidence rose in July to hit a more than two-and-a-half-year high, as the country’s export-driven recovery remained intact thanks to solid global demand, the Reuters Tankan poll showed.
The Reuters Tankan sentiment index for manufacturers rose to 25 from 22 in June, its highest since November 2018, the poll conducted June 30-July 9 showed. The service index fell to minus 3 from a flat reading the prior month.
· Southeast Asia seeks greater tech cooperation as U.S.-China rivalry grows
As the ongoing rivalry between the United States and China threatens to split the global technology sector, Southeast Asian countries are championing for digital integration.
Southeast Asia is home to some 400 million internet users and 10% of them went online for the first time in 2020, as the coronavirus pandemic pushed more business transactions to the internet.
The region’s 10-member economic union — the Association of Southeast Asian Nations, or ASEAN — is focused on “technology neutrality” even as the threat of bifurcation lingers, according to Josephine Teo, Singapore’s Minister of Communications and Information.
· CORONAVIRUS UPDATE:
- Australia extends Sydney lockdown as COVID-19 outbreak nears 900 infections
Australian authorities extended a lockdown in Sydney on Wednesday by at least 14 days, after three weeks of initial restrictions failed to stamp out the biggest outbreak of COVID-19 this year in the country's largest city.
- Australia faces first economic contraction in a year on Sydney lockdown
Reference: Reuters, CNBC
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