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PRECIOUS-Gold hits 1-week low as renewed risk appetite dulls lustre

Gold dropped for a second straight session to its lowest level in more than a week on Wednesday, as risk appetite resumed with equities and U.S. bond yields rebounding to curb safe-haven bullion bids.

· Spot gold fell 0.4% to $1,803.11 per ounce by 12:34 p.m. EDT, having hit a low since July 12 of $1,793.59.

· U.S. gold futures settled 0.4% down at $1,803.40.

· Surging Delta variant COVID-19 infections, which raised fears over a stalling global economic recovery, had weighed on risk sentiment and sparked an equities sell-off on Monday, but stocks and bond yields have since recovered, dimming safe-haven bullion’s appeal.

· “There’s a sigh of relief in equities and Treasuries and oil are back up again. These are signs of the reflation trade, which is not good for gold,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

But Streible said reflation with higher economic growth and rising inflation was positive for silver, platinum and palladium which also have industrial applications.

· Higher yields weigh on non-yielding gold, as it raises its opportunity cost.

· “We’re back in this push-pull market condition with some factors affecting the gold market positively and others negatively,” said David Meger, director of metals trading at High Ridge Futures.

The possibility of the Fed’s transitory inflation view being proved correct, especially given rising COVID-19 cases, is a negative for an inflation-hedge like gold, but accommodative monetary policy in that scenario would support gold, Meger noted.

· U.S. Federal Reserve officials will meet next week,

while the European Central Bank meeting is on Thursday.

· Gold’s losses also came despite a pullback in the U.S. dollar from its highest level since the start of the year.

· In other precious metals, silver rose 1.1% to $25.19 per ounce.

· Palladium was up 1% at $2,659.89.

· Platinum gained 1% to $1,077.03.

· Gold Holds Tight Range As Attention Shifts To ECB – What’s Next?

Gold prices are currently moving in a tight range as traders await a fresh fundamental spark to ignite the precious metals next big move.

Looking ahead to this week, trader’s attention has now shifted to the European Central Banks monetary policy meeting, scheduled for Thursday.

As one of the “Big 4” central banks, this event is expected to be a major market mover – especially as the ECB is expected to implement significant changes to its monetary policy strategy and forward guidance.

Earlier this month, the ECB raised its inflation target to 2% and also stated that the central bank would accept “a transitory period in which inflation will run moderately above target.” These changes are likely to be incorporated into the bank’s forward guidance.

Earlier this month, the ECB raised its inflation target to 2% and also stated that the central bank would accept “a transitory period in which inflation will run moderately above target.” These changes are likely to be incorporated into the bank’s forward guidance.

The meeting should shed more light on whether the ECB’s new strategy is just window-dressing or an actual shift towards a more dovishness monetary policy stance to achieve what the ECB hasn’t achieved for a decade – which is getting inflation back under control.

The EBC meeting takes place one week ahead of the Federal Reserve’s July monetary policy meeting, which is also likely to be dominated by the narrative of surging inflation.

· ECB set to promise even longer support to charge inflation

The European Central Bank is all but certain to promise an even longer period of stimulus on Thursday to make good on its commitment to boost inflation but the debate among policymakers is likely to be tense and no new measures will be announced.

· Bitcoin extends gains, climbing above $32,000 as cryptocurrencies rebound from sell-off

· Tesla will 'most likely' restart accepting bitcoin as payments, says Musk

The price of ethereum rose Wednesday afternoon after Tesla and SpaceX CEO Elon Musk said he owns the cryptocurrency at The B Word conference, an event hosted by the Crypto Council for Innovation.

Ethereum, which was already rallying on the day, touched its high of the session after Musk’s mention. It was last up more than 12% and near the highs of the day.

· Republicans nix U.S. infrastructure debate, which could resume next week

· U.S. CBO sees debt default in Oct or Nov if no debt limit hike

The U.S. Treasury Department is likely to be unable to pay its bills and provide funding for certain benefit programs sometime in October or November unless Congress approves legislation extending the agency’s statutory borrowing authority, the non-partisan Congressional Budget Office forecast on Wednesday.

· CORONAVIRUS UPDATES:

· U.S. extends travel curbs at Canada, Mexico land borders through Aug. 21

Reference: CNBC, Reuters, Worldometers