Gold edges up as risk appetite eases, yields retreat
Gold inched higher on Thursday as stocks and U.S. bond yields pulled back to offset a firmer dollar and restore some of bullion’s allure as a safe haven.
· Spot gold had risen 0.1% to $1,804.45 per ounce by 1:33 p.m. ET.
· U.S. gold futures settled 0.1% higher at $1,805.40.
· Benchmark U.S. Treasury yields retreated after hitting a near one-week high and stocks paired initial gains as risk sentiment was curbed by data showing U.S. jobless claims rose unexpectedly to two-month highs, channeling some inflows to bullion.
· “Real interest rates are deeply negative, which shows that inflation is running hot, and there’s no chance the U.S. Federal Reserve can make real rates positive short-term, so you have people coming to the realization that you need to own gold,” said Michael Matousek, head trader at U.S. Global Investors.
· Gold also took support from a European Central Bank pledge to keep interest rates at record lows for even longer.
· “Both the U.S. Fed and the ECB are pretty much in sync in delivering a lower interest rate environment for longer and that should be positive for gold over the long-term,” said Edward Moya, senior market analyst at OANDA.
· The Fed’s policy meeting next week follows comments from Chair Jerome Powell which suggested that the central bank would remain accommodative despite recent spikes in inflation readings.
· But “gold’s persistent weakness against real yields points to a vulnerable micro-structure and its inability to rally despite ongoing risk-off highlights that speculative flows remain particularly weak, reinforcing the potential for a deeper pullback,” TD securities wrote in a note.
· ECB pledges low rates for longer as virus casts shadow over growth
The European Central Bank pledged on Thursday to keep interest rates at record lows for even longer to boost sluggish inflation and warned that the rapidly spreading Delta variant of the coronavirus poses a risk to the euro zone’s recovery.
· U.S. jobless claims show surprise gain, well above expectations
Weekly jobless claims unexpected moved higher last week despite hopes that the U.S. labor market is poised for a strong recovery heading into the fall.
· Existing home sales rose 1.4% during June to a 5.86 million-unit pace, ending a four-month streak of declines.
· U.S. Treasury's Yellen tells development banks to mobilize private capital for climate fight
· Embedded as a risk, new COVID cycle could challenge Fed, recovery
Five weeks after dropping its reference to the coronavirus as a weight on the economy, the U.S. Federal Reserve is confronting a challenging new rise in cases that has fueled doubts about the global recovery and is already forcing other central banks to consider retooling their policies.
The daily pace of new infections has more than doubled since the Fed's June 16 policy meeting, when Chair Jerome Powell said that while it was "premature to declare victory" given the appearance of the more infectious coronavirus Delta variant, a decline in infections, hospitalizations and deaths "should continue."
It hasn't, and while the worst current outbreaks have been localized, news of rising case loads once again straining hospital capacity spilled into financial markets with a sharp Monday sell-off.
Analysts still expect economic growth in 2021 to be the strongest since 1984, but are now again mining real-time data for signs the Delta variant is changing behavior.
· IMF says Fed 'highly effective,' must carefully communicate withdrawal plans
The International Monetary Fund’s Executive Board on Thursday said the U.S. Federal Reserve has been “highly effective” at managing the COVID-19 crisis and supporting recovery with its commitment to overshoot a 2% inflation target in the near term.
· IMF board approves lending reforms to better support low-income countries
· UK's Johnson urges EU to consider post-Brexit proposals seriously
Prime Minister Boris Johnson urged European Commission President Ursula von der Leyen on Thursday to consider seriously Britain's proposals to change what he called the "unsustainable" way a Brexit deal is governing trade with Northern Ireland.
· COVID UPDATES:
· U.S. CDC advisers mull COVID-19 boosters for immune-compromised people
Advisers to the U.S. Centers for Disease Control and Prevention on Thursday will consider evidence suggesting that a booster dose of COVID-19 vaccines could increase protection among people with compromised immune systems.
· U.S. CDC advisers back J&J COVID-19 vaccine benefits amid neurological illness reports
· China rejects WHO plan for study of COVID-19 origin
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