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Gold drops to fresh low since March, bouncing off $1,687 to $1,707 by the press time of early Monday morning in Asia, marking over 3.0% loss.

The yellow metal bears the burden of the US dollar strength while refreshing the multi-day low. Also acting as the key catalyst could be the metal’s technical breakdown of a multi-day-old rising trend line as well as a horizontal area comprising multiple levels marked since March 18.

It’s worth noting that the US Dollar Index (DXY) remains firm around 92.78, up 0.55% intraday, after rising the most in 13 days on Friday. The greenback gauge cheered strong US employment data on Friday to regain the upside momentum.

As per the latest release, the headline Nonfarm Payrolls (NFP) jumped 943K versus 938K prior (revised from 850K), also crossing the market expectations of 870K. Further, the Unemployment Rate declined to 5.4% from 5.9% in June and the Labor Force Participation Rate improved modestly to 61.7%.

It should be noted that the weekend deadlock over the US stimulus package and geopolitical concerns over the Taliban and North Korea also put a safe-haven bid under the US dollar.

Furthermore, the covid woes and indecision over the Fed’s next move act as extra catalysts that back the risk-off mood.

Against this backdrop, S&P 500 Futures drop 0.25% whereas the US 10-year Treasury yields seesaw around 1.30% after declining the most in five months on Friday.

Moving on, China inflation numbers for July may offer intermediate direction to gold sellers but major attention will be given to the risk catalysts for fresh impulse.

 

Technical analysis

Gold stays below the previous support line from March 2020, suggesting further weakness towards a horizontal area comprising a yearly low near $1,676.

However, any further downside will be challenged by the oversold RSI conditions, which if ignored could drag the quote to March 2020 high near $1,645.

Meanwhile, corrective pullback remains less important until the quote stays below the support-turned-resistance line near $1,753.

It’s worth observing that the bulls remain less convinced before gold prices regain above the 200-DMA level of $1,817.

 

·         SPDR GOLD HOLDINGS:

 

·         Gold slides over 2% as robust jobs data strengthens Fed taper bets

Gold slid to its lowest in over a month on Friday after a strong U.S. jobs report boosted expectations the Federal Reserve could begin tapering its economic support sooner than previously anticipated.

Spot gold fell 2.2% to $1,763.96 per ounce by 1:50 p.m., after touching its lowest since June 30 at $1,757.70. U.S. gold futures settled 2.5% down at $1,763.10.

“We’ve already seen peak GDP, peak corporate earnings and economic data is going to be mixed at best going forward, so gold is still pretty good value,” potentially limiting its downside, Blue Line’s Streible added.

Caught in gold’s slipstream, silver slipped 3.2% to $24.33 an ounce, while platinum dropped 2.2% to $983.53 and was set for its worst week since June. Palladium, fell 0.8% to $2,628.72.

 

·         Analysis: U.S. jobs report bolsters case for Fed to taper asset purchases

·         Strong jobs report is not a game changer for Fed policy, Wells Fargo suggests

Under Schumacher’s scenario, the Fed could start to implement tapering as soon as this November. The move would likely put upward pressure on the benchmark 10-year Treasury Note yield.

But there’s a wildcard to Schumacher’s forecast: Covid-19 delta variant cases. The surge could put negative pressure on yields.

Schumacher doubts the government will issue dramatic lockdowns, but he warns new constraints on movement would hurt economic activity.

However, his overall worry affecting the bond market is sticker than expected inflation. Schumacher is concerned it would spark a significant jump in yields.

 

·         President Joe Biden cheered the strong employment report. "More than 4 million jobs created since we took office," Biden wrote on Twitter. "It's historic - and proof our economic plan is working."

But a resurgence in infections, driven by the Delta variant of the coronavirus, could discourage some unemployed people from returning to the labor force.

 

·         U.S. consumer credit grows at record rate in June

U.S. consumer credit grew at the fastest rate ever in June, as Americans increased their credit card usage to drive consumer spending in the second quarter, data from the Federal Reserve showed on Friday.

Total consumer credit expanded at a pace of $37.69 billion, which was the quickest rate ever and followed a $36.69 billion increase in May, the U.S. central bank said. Economists polled by Reuters had expected consumer credit to increase at a rate of $23.00 billion in June.

 

·         U.S. Senate trudges toward passing $1 trillion infrastructure bill

The U.S. Senate moved slowly on Sunday toward passing a $1 trillion bipartisan infrastructure bill, held back by one Republican lawmaker who opposed speeding up a vote on the nation’s biggest investment in roads and bridges in decades.

 

·         ECB must tighten policy if needed to counter inflation, Weidmann says

The European Central Bank must tighten monetary policy if it needs to counter inflationary pressures and cannot be put off from doing so by the financing costs of euro zone states, ECB policymaker Jens Weidmann told the Welt am Sonntag newspaper.

 

·         China's export slowdown in July may signal more bumps ahead

July exports +19.3% yr/yr vs +20.8% forecast in Reuters poll

July imports +28.1% yr/yr vs +33.0% forecast

July trade balance $56.58 bln vs $51.54 bln forecast

China's export growth unexpectedly slowed in July following outbreaks of COVID-19 cases, while imports also lost momentum, pointing to a slowdown in the country's industrial sector in the second half even as easing global lockdowns boost commerce.

The world's biggest exporter has staged an impressive economic rebound from a coronavirus-induced slump in the first few months of last year after quickly containing the pandemic, and its rapid vaccination rollout has helped drive confidence.

But new infections in July, mainly caused by the highly transmissible Delta strain have spread to tens of Chinese cities, prompting local authorities to lock down affected communities, order millions to be tested and temporarily suspend operations of some businesses, including factories.

 

·         China July trade surplus with United States at $35.4 bln

China’s trade surplus with the United States stood at $35.4 billion in July, Reuters calculations based on Chinese customs data showed on Saturday, up from $32.58 billion in June.

For the first seven months of the year, the surplus was $200.32 billion, up from $164.92 billion during the first half of 2021.

Amid worsening relations between the world’s two largest economies, U.S. Deputy Secretary of State Wendy Sherman had a face-to-face meeting with China’s Foreign Minister Wang Yi at the end of July.

However, no specific outcomes were agreed and the meeting did not mention the prospect of a meeting between U.S. President Joe Biden and Chinese President Xi Jinping

 

·         North Korea prepares to resume trade with China

 

 

·         COVID-19 UPDATES:

 

 

 

·         Early signs COVID-19 vaccines may not stop Delta transmission, England says

There are early signs that people who have been vaccinated against COVID-19 may be able to transmit the Delta variant of the virus as easily as those who have not, scientists at Public Health England (PHE) said on Friday.

The findings chime with those from the U.S. Centers for Disease Control and Prevention, which last week raised concerns that vaccinated people infected with Delta could, unlike with other variants, readily transmit it.

The highly infectious Delta variant has become the dominant coronavirus type globally, sustaining a pandemic that has already killed more than 4.4 million people, including over 130,000 in Britain.

Vaccines have been shown to provide good protection against severe disease and death from Delta, especially with two doses, but there is less data on whether vaccinated people can still transmit it to others.

 

·         Explainer: Beyond Delta, scientists are watching new coronavirus variants

The continued spread of the SARS-CoV-2 virus has spawned a Greek alphabet of variants - a naming system used by the World Health Organization to track concerning new mutations of the virus that causes COVID-19. Some have equipped the virus with better ways of infecting humans or evading vaccine protection.

Scientists remain focused on Delta, now the dominant variant rising rapidly around the world, but are tracking others to see what may one day take its place.

 

LAMBDA – ON THE WANE?

The Lambda variant has attracted attention as a potential new threat. But this version of the coronavirus, first identified in Peru in December, may be receding, several infectious disease experts told Reuters.

The WHO classifies Lambda as a variant of interest, meaning it carries mutations suspected of causing a change in transmissibility or causing more severe disease, but it is still under investigation. Lab studies show it has mutations that resist vaccine-induced antibodies.

 

B.1.621 - ONE TO WATCH

The B.1.621 variant, which first arose in Colombia in January, where it caused a major outbreak, has yet to earn a Greek letter name.

The European Center for Disease Prevention and Control has listed it as a variant of interest, while Public Health England describes B.1.621 as a variant under investigation. It carries several key mutations, including E484K, N501Y and D614G, that have been linked with increased transmissibility and reduced immune protection.

 

·         Singapore to start relaxing Covid restrictions Aug. 10 as vaccination rate rises

Singapore’s Health Minister Ong Ye Kung said the number of daily cases has stabilized since the latest restrictions were imposed. During that time, the share of people who received two doses of Covid vaccine rose from around 40% to 67% as of Thursday.