Gold ekes out gains in choppy trade as investors digest Fed strategy
Gold prices on Wednesday shook off initial declines to move higher after a U.S. Federal Reserve policy statement as chair Jerome Powell flagged lingering risks to the U.S. economy from the Delta coronavirus variant.
· Spot gold was up 0.48% at $1,807.26 per ounce by 4:05 p.m. ET.
· U.S. gold futures settled 0.48% higher at $1,808.40.
· Prices had dipped slightly after the Fed statement, which said the U.S. economic recovery remains on track despite a rise in coronavirus infections, and flagged ongoing talks around the eventual withdrawal of monetary policy support.
But bullion turned positive after Powell in a subsequent news conference said the rising cases of the Delta variant may weigh on a recovery in the labor market and that the central bank was still a “ways away” from considering raising interest rates.
· Terming the initial declines to the statement a “knee-jerk” reaction, Edward Moya, senior market analyst at OANDA, said choppy price action in gold was likely as investors digest Powell’s statement.
“While the economy is still heading in the right direction, the overall takeaway is that we’re still going to see a lot of accommodation remain in place, and this taper announcement, whenever it happens, is going to be gradual and not on an accelerated basis,” Moya added.
· Elsewhere, silver rose 1.5% to $25.03.
· Palladium gained 0.6% to $2,622.50 and platinum advanced 1.6% to $1,066.70.
· Treasury yields little changed after Fed makes no move on asset purchases
The yield on the benchmark 10-year Treasury note dipped by less than 1 basis point to 1.229% at 4 p.m. ET.
· Dollar dips after Fed fails to provide taper timeline
The dollar eased on Wednesday after the U.S. Federal Reserve said the economic recovery is on track despite a rise in Covid-19 infections in a policy statement that was upbeat but did not set a timeline for tapering Fed asset purchase.
The dollar index, which measures the greenback against a basket of six currencies, was 0.149% lower at 92.324, easing off after initially spiking up to 92.766 after the Fed statement was released.
· Bitcoin was up 2.3% at $40,381.88, having broken above $40,000 two days ago for the first time in about six weeks, as short sellers bailed out and traders drew confidence from recent positive comments about the cryptocurrency by high-profile investors.
· Fed holds rates near zero, says economy has gotten better even with pandemic worries
The Federal Reserve on Wednesday held its benchmark interest rate near zero and said the economy continues to progress despite concerns over the pandemic spread.
· Fed signaled tapering is coming next, says Sarah Bloom Raskin
Sarah Bloom Raskin, former United States deputy secretary of the Treasury; David Zervos, Jefferies; and Paul McCully, former PIMCO chief economist, join ‘Closing Bell’ to discuss the Federal Reserve Chair Jerome Powell’s remarks on his economic outlook and what it means for the market.
· Powell says Fed likely to taper asset purchases 'at the same time'
The Wall Street forecaster who warned investors to brace for once in a generation inflation has a new concern: Delta variant cases sparking new economic restrictions.
According to Jim Bianco, the emerging risk will hinder the ability to pick market winners and losers into fall.
“This is the toughest one [risk] for investors to get their head around,” the Bianco Research president told CNBC’s “Trading Nation” on Wednesday.
In Bianco’s bearish scenario, rising Covid-19 cases would hurt economic activity and earnings.
“You could see a big rotation away from the reopening stocks,” said Bianco, who sees gaming, hotel, airline and cruise line stocks among the most vulnerable groups.
On the other hand, he believes the risk could boost technology and stay-at-home trades. If the delta variant continues to spread, Bianco sees a high probability of more stimulus money.
· Economic growth likely hot in the second quarter, but shortages may have kept it from overheating
The U.S. economy is expected to have grown at the strongest pace of the year, but growth could have been even more rapid were it not for supply-chain disruptions and a shortage of workers.
According to Dow Jones, economists expect to see that U.S. gross domestic product grew at an annual rate of 8.4% in the April to June period, after growing by 6.4% in the first quarter. That estimate is lower than the more than 10% that had been expected earlier in the year. The GDP report will be released Thursday at 8:30 a.m. ET.
That would be the fastest pace of growth since early 1983, with the exception of last year’s big bounce back in the third quarter as the economy reopened.
· U.S. goods trade deficit widens on imports; inventories increase
The goods trade deficit increased 3.5% to $91.2 billion last month, the Commerce Department said on Wednesday. Imports of goods advanced 1.5% to $236.7 billion. There were increases in imports of food, industrial supplies and capital goods.
Goods exports rose 0.3% to $145.5 billion, amid a sharp decline in food shipments. Capital goods exports also slipped. But the nation exported more motor vehicles and consumer goods.
· Senate votes to advance bipartisan infrastructure bill as Democrats forge ahead with ambitious economic agenda
· COVID-19 UPDATES:
· Pfizer’s CEO says Covid vaccine effectiveness drops to 84% after six months
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