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Gold eased on Thursday after a U.S. Federal Reserve official’s hawkish comments reinforced bets for early tapering of the central bank’s asset purchases ahead of a key jobs report.

·         Spot gold slipped 0.4% to $1,804.46 per ounce by 1:42 p.m. EDT (1742 GMT), and U.S. gold futures settled 0.3% lower at $1,808.90.

 

·         SPDR GOLD HOLDINGS:

 

·         Gold prices jumped more than 1% on Wednesday on weaker-than-expected U.S. ADP jobs data, but gave up those gains after Fed Vice Chair Richard Clarida suggested the central bank could begin tapering later this year.

 

·         “Gold is trading weak relative to real yields, suggesting the metal’s micro-structure is vulnerable to a downside catalyst and we’re expecting a strong beat to Friday’s jobs data, so there could be some further momentum to the downside,” TD Securities commodity strategist Daniel Ghali said.

 

·         Friday’s U.S. July non-farm payrolls report could shape the Fed’s policy outlook, with economists in a Reuters poll predicting a gain of 870,000 jobs.

 

·         Higher interest rates raise the opportunity cost of holding non-interest bearing gold.

 

 

·         OANDA analyst Craig Erlam said recent comments by various Fed officials give the impression that the balance of power is falling in favour of the hawks, which a potentially strong jobs report would accelerate, and that does not bode well for gold.

 

·         Elsewhere, platinum fell 1.5% to $1,010.08 an ounce.

 

·         Palladium rose 0.2% to $2,650.61.

 

·         Top carmakers have recently said a chip shortage which has hindered auto production could persist for longer, potentially affecting demand for platinum and palladium which are used to curb vehicle emissions.

 

·         “Certainly the fact that auto production might be constrained for longer than was expected is a downside risk for the platinum-palladium group metals,” TD Securities commodity strategist Daniel Ghali said.

 

·        Silver dropped 0.6% to $25.21 per ounce.

 

·         Continuing jobless claims hit new pandemic-era low, falling below 3 million

First-time filings for benefits dipped to 385,000 for the week ended July 31, a decline of 14,000 from the previous week as the jobs market remains essentially in a holding pattern during the economic recovery. The total hit the Dow Jones estimate exactly.

That level plunged by 366,000 to 2.93 million, the first time continuing claims have fallen below 3 million since March 14, 2020.

 

 

·         Fed's Waller says accommodative policy may be pulled back sooner than expected

The U.S. economic recovery is progressing rapidly, the labor market is improving and it may be possible for the Federal Reserve to start withdrawing its accommodative monetary policy sooner than some expect, Fed Governor Christopher Waller said on Thursday.

“My outlook is very much that the economy is going to recover,” Waller said during a virtual event organized by the American Enterprise Institute think tank. “We will be able to pull back on accommodative monetary policy potentially sooner than others think.”

 

·         Fed's Kashkari: Delta may throw wrinkle into taper plan

Minneapolis Federal Reserve President Neel Kashkari on Thursday said the highly transmissible Delta variant of the novel coronavirus could throw a "wrinkle" into the labor market recovery and the timeline for a reduction in the Fed's asset-purchase program.

 

·         U.S. Senator Joe Manchin urges Fed to reduce asset purchases to minimize inflation risks

U.S. Senator Joe Manchin urged the Federal Reserve to start withdrawing some of its economic support in a letter to Fed Chair Jerome Powell in which the moderate Democratic lawmaker from West Virginia said he is worried easy monetary policy may fuel higher inflation.

 

·         U.S. Senate works to finish $1 trillion infrastructure bill

The U.S. Senate on Thursday struggled to finish work on a bipartisan, $1 trillion infrastructure bill, as leaders negotiated behind the scenes on the best way to complete remaining amendments and move to a vote on passage.

"People want to finish, and move on to the budget, and go home," Republican Senator Cornyn told reporters.

The Senate was scheduled to begin a summer recess next week, which is likely to be delayed by at least a few days.

Cornyn said he thought the Senate would move to the votes on amendments, which could last late into the night, and "maybe be finished with the infrastructure bill tonight."

 

·         Infrastructure bill would add $256 billion to deficits over a decade, CBO says

The Congressional Budget Office estimated the bipartisan infrastructure bill would add $256 billion to budget deficits over a decade.

 

·         Analysis: Private equity struggles to get in on $1 trillion U.S. infrastructure bonanza

Private equity firms are fretting that a long-awaited $1 trillion infrastructure bill under negotiation by U.S. lawmakers will not create enough opportunities for them to invest in lucrative assets such as toll roads and airports.

 

·         Dollar steady even as yields edge up ahead of U.S. jobs report

The dollar took a breather on Thursday, a day after being given a boost from seemingly hawkish comments by a top Federal Reserve official, as the market awaited new direction from Friday’s U.S. jobs report.

The dollar index against major currencies was down 0.03% to 92.249 in the afternoon in New York.

It also shrugged off another up-day in U.S. stocks and movement in the U.S. Treasury market, where the yield on the 10-year note rose as much as 4 basis points and was last at 1.2152%.

According to a Reuters survey of economists, nonfarm payrolls likely increased by 880,000 jobs in July, up from 850,000 in June. Economists have warned that the spread of the Delta variant of the coronavirus and mixed readings from labor market indicators make estimates for July troublesome.

The euro was flat at $1.1835.

  

·         Bank of England keeps policy unchanged, warns of ‘more pronounced’ period of inflation

The British pound was up 0.3% to $1.3931 by 3:06 p.m. ET (1906 GMT) after the Bank of England kept the size of its bond-buying programme unchanged and held its benchmark interest rate at a historic low of 0.1%.

The central bank said it would start reducing its stock of bonds when its policy rate reaches 0.5% by not reinvesting proceeds and that it would consider actively selling down holdings when the rate reaches at least 1%.

The BOE now expects U.K. GDP to grow by 3% in the third quarter, weaker than forecast in the May report, given a recent surge in Covid-19 cases and hundreds of thousands of workers being asked to self-isolate.

The central bank also raised its inflation forecasts, as expected by economists, following two consecutive months of above-forecast readings.

“Overall, Bank staff now expect inflation to rise materially further in the near term, temporarily reaching 4% in 2021 Q4 and 2022 Q1, 1½ percentage points higher than in the May projection,” the bank said in its monetary policy report.

 

·         Ether, the second-largest cryptocurrency, was up 3% to $2,810 after an initial dip when the Ethereum blockchain network activated a technical change that was to take some tokens out of circulation.

 

·         Japan's household spending unexpectedly falls as firms cut bonuses

 

·         Iran’s hardline cleric Ebrahim Raisi sworn in as president amid slew of tensions

Iranian cleric Ebrahim Raisi has been sworn in as the Islamic Republic’s new president against the backdrop of challenging negotiations with the West on the revival of its nuclear deal, domestic unrest, a ramp-up in local nuclear development and accusations of sabotage in Gulf waters.

 

·         Taliban target provincial Afghan cities in response to U.S. strikes, commanders say

 

·         COVID-19 UPDATES:

 

 

·         U.S. COVID-19 cases reach six-month high, Florida grapples with surge

 

·         U.S. plans to give extra COVID-19 shots to at-risk Americans, Fauci says

 

The United States is working to give additional COVID-19 booster shots to Americans with compromised immune systems as quickly as possible, as cases of the novel coronavirus continue to rise, top U.S. infectious disease expert Dr. Anthony Fauci said Thursday.