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Gold fell and was heading for a weekly dip on Friday as a stronger dollar, firmer yields and equity markets chipped away at its appeal.

 

·         Spot gold fell 0.3% to $1,800.72 per ounce by 1:43 pm ET.

 

·         U.S. gold futures settled 0.2% lower at $1,801.80.

 

·         Bullion has shed 0.7% this week after briefly moving toward last week’s one-month peak, as fears over rising Delta variant COVID-19 cases have eased, prompting investors to move out of the safe-haven asset as risk appetite returned.

 

·         SPDR Gold Holdings:

Holdings in New York’s SPDR Gold Trust, the largest gold-backed exchange-traded fund (ETF), were at their lowest in more than two months on Thursday.

·         “The gold market is seeking out a fresh fundamental driver and there really isn’t one,” said Jim Wyckoff, senior analyst with Kitco Metals, noting weaker real yields and a jump in COVID-19 cases were not enough to move prices higher.

 

“Technical traders are taking over because of the lack of fundamentals and gold’s near-term technical posture has turned negative, inviting some traders to short the market,” Wyckoff added.

 

·         Heaping pressure on the metal was a stronger dollar index that held close to a 3-1/2-month peak and firmer benchmark Treasury yields. Higher yields tend to weigh on gold, which pays no interest as it translates into an increased opportunity cost of holding the metal.

 

·         Market focus now turns to next week’s U.S. Federal Reserve meeting after the European Central Bank on Thursday pledged to keep interest rates at record lows for some time.

 

·         “Gold prices have found good support from the physical market on the downside, but have struggled to gain momentum as speculative positioning remains light,” said Suki Cooper, analyst at Standard Chartered.

 

·         Silver fell 1.2% to $25.16 per ounce, and was set for a third consecutive weekly fall.

 

·         Platinum slipped 3% to $1,059.76 per ounce, and palladium shed 1.7% to $2,672.76 per ounce.

 

·         TREASURIES-U.S. Treasury yields edge up before next week's Fed meeting

Treasury yields rose on Friday ahead of the Federal Reserve's policy-setting meeting next week, which will provide clues on the strength of the U.S. recovery and when the central bank might start to curb its economic support.

The yield on 10-year Treasury notes hovered just below 1.3%, or almost 17 basis points higher than a five-month low set Tuesday, but still at the low end of a recent range.

The benchmark note traded up 2.1 basis points at 1.288% after briefly rising above 1.3%. The yield on the 30-year rose 2.2 basis points to 1.925%.

 

·         U.S. Treasury Secretary Yellen warns Congress on debt limit

U.S. Treasury Secretary Janet Yellen urged lawmakers on Friday to increase or suspend the nation's debt limit as soon as possible and warned that if Congress does not act by Aug. 2 the Treasury Department would need to take "extraordinary measures" to prevent a U.S. default.

In a letter to House of Representatives Speaker Nancy Pelosi, Yellen said that Oct. 1, the first day of the next fiscal year, could be a critical date for the U.S. ability to pay its obligations without debt limit legislation due to large federal outlays scheduled for then.

In the letter, also sent to other congressional leaders from both parties, Yellen said U.S. debt would be at the statutory limit on Aug 1, when a two-year suspension is set to expire.

 ·         China’s digital yuan could pose challenges to the U.S. dollar

China is beating the U.S. when it comes to innovation in online money, posing challenges to the U.S. dollar’s status as the de facto monetary reserve. Nearly 80 countries — including China and the U.S. — are in the process of developing a CBDC, or Central Bank Digital Currency.

It’s a form of money that’s regulated but exists entirely online. China has already launched its digital yuan to more than a million Chinese citizens, while the U.S. is still largely focused on research.

 

·         Oil steadies on forecasts for tight supplies

Oil prices were little changed on Friday and Brent was on track to end the week higher after a strong recovery from Monday’s steep slide, underpinned by expectations that supply will remain tight through the year.

Brent crude advanced 31 cents, or 0.4%, to settle at $74.10 after jumping 2.2% on Thursday. U.S. West Texas Intermediate (WTI) crude settled 16 cents, or 0.2%, higher at $72.07 per barrel, having gained 2.3% on Thursday.

U.S. crude futures were set to end the week little changed, having declined in the previous two weeks. Brent is set to gain 0.4% on the week.

 

·         CORONAVIRUS UPDATES:

·         Israel says Pfizer Covid vaccine is just 39% effective as delta spreads, but still prevents severe illness

Pfizer and BioNTech’s Covid-19 vaccine is just 39% effective in Israel where the delta variant is the dominant strain, according to a new report from the country’s Health Ministry.