Gold prices eased on Friday, with a firmer dollar curtailing the precious metal’s brief rally spurred by U.S. Federal Reserve Chair Jerome Powell’s reassurance that a rate hike was not on the cards for the time being.
· Spot gold slipped 0.8% to $1,814.00 per ounce by 1:48 p.m. ET.
· U.S. gold futures settled 1% down at $1,817.20.
· Gold hit a two-week peak on Thursday after Powell said the U.S. job market still had some ground to cover before the Fed would pull back support. It was also on track for a weekly gain.
· It is up 1.4% so far for this week.
· Bob Haberkorn, senior market strategist at RJO Futures said data showing a rise in core inflation at a slightly slower-than-expected pace last month, coupled with a stronger dollar, was weighing on gold.
Gold is traditionally seen as a hedge against inflation.
Haberkorn also said: “Gold still looks strong at these levels and the fact the Fed didn’t really say anything that is going to change course on asset purchases or rate hikes adds strength to the market.”
· Lower government bond yields decrease the opportunity cost of holding gold, which pays no interest.
· The dollar index, which had slipped to a one-month low earlier, was up 0.3%, reducing gold’s appeal for other currency holders.
“There were a lot non-traditional gold and silver investors that bought the metals after last year’s spike in August and prices haven’t got back to that level, so you have a lot of investors saying ‘this isn’t happening, I’m going to move my money elsewhere’.”
· Silver fell 0.3% to $25.45 but was on track for its first weekly gain in four.
· Palladium gained 0.5% to $2,659.19.
· Platinum fell 1.1% to $1,048.81.
· Dollar rises but still set for biggest weekly loss since May
The dollar rose on Friday along with other safe haven currencies as stocks fell and as upbeat U.S. economic data helped reverse some of the losses from earlier this week when dovish remarks by the Federal Reserve tanked a month-long rally in the greenback.
The dollar index, which measures the greenback against a basket of six currencies, was 0.32% higher at 92.181 at 2:45 p.m. ET. The index was still down 0.77% for the week, on pace for its worst weekly performance since the first week of May.
Friday’s gains for the U.S. currency came as stocks fell following a glum earnings report by Amazon, growing concerns over the rapid spread of the COVID-19 Delta variant, and in the wake of a regulatory crackdown by China on its technology and education sectors.
The dollar also got a lift after St. Louis Federal Reserve President James Bullard said the Fed should start reducing its $120 billion in monthly bond purchases this fall and cut them “fairly rapidly” so the program ends in the first months of 2022 to pave the way for a rate increase that year if needed.
· TREASURIES-U.S. yields slide after inflation data in risk-off backdrop
The yield on the benchmark 10-year Treasury note fell 4 basis points to 1.231% by 4:00 p.m. ET.
· Bullard: Fed should taper this fall, go "fairly rapidly" to end early 2022
The Federal Reserve should start reducing its $120 billion in monthly bond purchases this fall and cut them "fairly rapidly" so the program ends in the first months of 2022 and paves the way for an interest rate increase that year if needed, St. Louis Federal Reserve president James Bullard said on Friday.
"We are tilted too much to the dovish side," Bullard said in comments to reporters, urging the Fed to decide at its September meeting on a plan to phase out its bond purchases by the end of March, 2022. "The whole central bank community has been in dovish mode for a long time. If the data shift against us we may have to move quickly, and that can be disruptive."
Bullard was the first Fed official to speak publicly after the central bank's meeting this week, where policymakers said they expected the recovery to continue despite a jump in coronavirus infections.
· Minneapolis Fed president says Delta variant could slow labor market recovery
Minneapolis Federal Reserve Bank President Neel Kashkari said on Sunday that concerns about the spread of the contagious Delta variant could slow the U.S. labor market recovery.
“It’s really creating a bunch of caution,” he told CBS’ “Face the Nation”, noting that between seven and nine million Americans are still out of work likely due to anxiety about the coronavirus.
· Fed's taper timing depends on progress on jobs, Brainard says
The Federal Reserve needs to see more improvement in the pandemic-hammered U.S. labor market before pulling back on support for the economy, Fed Governor Lael Brainard said on Friday, adding that she’ll be more confident in judging that progress once she has September data in hand.
“The determination of when to begin to slow asset purchases will depend importantly on the accumulation of evidence that substantial further progress on employment has been achieved,” Brainard said in remarks prepared for delivery to the Aspen Economic Strategy Group. “As of today, employment has some distance to go.”
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· U.S. consumer sentiment declines in July as inflation remains concern
U.S. consumer sentiment fell to a five-month lowin July amid lingering concerns about inflation, a survey released on Friday showed.
The University of Michigan's Consumer Sentiment Index fell to a final reading of 81.2, the lowest level since February, from June's final level of 85.5. The final reading for July, however, was above the July preliminary reading of 80.8 andabove the median forecast of 80.8 among economists polled by Reuters.
The survey's barometer of current economic conditions fell to 84.5, the lowest since August 2020, from June's 88.6 reading. This was also in line with July's preliminary reading of 84.5.
· Services buoy U.S. consumer spending; inflation pushes higher
U.S. consumer spending surged in June as vaccinations against COVID-19 boosted demand for travel-related services, but part of the increase reflected higher prices, with annual inflation accelerating further above the Federal Reserve's 2% target.
Though personal income barely rose last month, other data on Friday showed wage growth in the second quarter was the fastest in 13 years on an annual basis. That, together with rising household wealth and ample savings should keep consumer spending strong, though rising COVID-19 infections pose a risk.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, rebounded 1.0% last month after dipping 0.1% in May, the Commerce Department said. Economists polled by Reuters had forecast consumer spending rising 0.7%.
Spending on services advanced 1.2% last month. The broad increase was led by spending at restaurants and hotels.
· Global chip shortage, COVID-19 pandemic weigh on French car market rebound
· China’s factory activity in July grows at slowest pace since February 2020
China’s factory activity expanded in July at the slowest pace in 17 months as higher raw material costs, equipment maintenance and extreme weather weighed on business activity, adding to concerns about a slowdown in the world’s second-biggest economy.
The official manufacturing Purchasing Manager’s Index (PMI) eased to 50.4 in July from 50.9 in June, data from the National Bureau of Statistics (NBS) showed on Saturday, but remained above the 50-point mark that separates growth from contraction.
· China new home price growth slows in July - private survey
China’s growth in new home prices slowed in July for the first time in five months, with smaller cities especially weighed down by higher mortgage rates, price caps on resale homes and other steps to cool speculation, a private-sector survey showed on Sunday.
New home prices in 100 cities rose 0.35% in July from a month earlier, versus 0.36% growth in June, according to data from China Index Academy, one of the country’s largest independent real estate research firms.
· Japan's factory activity growth picks up, costs rapidly rise -PMI
Japan’s factory output growth picked up in July due to a stronger expansion of output and new orders, as manufacturers benefited from a continuing recovery of the coronavirus pandemic-hit global economy.
The final au Jibun Bank Japan Manufacturing Purchasing Managers’ Index (PMI) in July rose to 53.0 on a seasonally adjusted basis from 52.4 in the previous month.
· S.Korea July exports jump to record though growth pace slows
Exports rose 29.6% in July from the same month a year earlier to $55.43 billion, the largest amount since South Korea began compiling relevant data in 1956, the trade ministry said on Sunday.
The pace of growth, however, slowed from 39.8% in June on a fading base effect from a pandemic-induced slump last year. The figure was also short of the 30.2% median of 16 analyst estimates in a Reuters survey.
Imports soared 38.2% from a year earlier and compared to a 40.7% rise in June.
· SEC slaps new disclosure requirements on Chinese IPOs amid Beijing’s crackdown
The Securities and Exchange Commission said Friday it will require additional disclosures from Chinese companies seeking a listing on U.S. stock exchanges, following Beijing’s intensified crackdown on oversea share issuance.
· Kim Jong Un’s sister warns South Korea-U.S. drills will rekindle tensions
· Delta variant surge will crush reopening stocks, longtime market bear David Rosenberg suggests
Investors may want to start August by lightening up on the reopening trades.
Longtime market bear David Rosenberg warns surging Covid-19 delta variant cases paired with the culmination of fiscal stimulus will crush stocks tied to the economic recovery.
“We have to be prepared here for the economy to sputter in the next several months,” the Rosenberg Research president told CNBC’s “Trading Nation” on Friday. “You don’t have to basically abandon the stock market, but I definitely would not be in the value reflation cyclical trade.”
· CORONAVIRUS UPDATES:
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· CDC warns that delta variant is as contagious as chickenpox and may make people sicker than original Covid
· Fauci says he expects no new U.S. lockdowns despite surging Delta cases
President Joe Biden’s chief medical adviser Dr. Anthony Fauci said on Sunday he does not expect the United States will return to lockdowns, despite the growing risks of COVID-19 infections posed by the Delta variant.
Reference: CNBC, Reuters, Worldometers
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