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·         Gold prices rose on Tuesday after sharp sell-offs in the last two sessions, as demand for the safe-haven metal was spurred by a pause in the dollar’s rally, although fears of a sooner-than-expected U.S. interest rate hike capped bullion’s gains.

·         Spot gold was up 0.4% at $1,735.58 per ounce by 0523 GMT. U.S. gold futures rose 0.6% to $1,736.

·         “We are seeing some short-covering taking place right now in the market after correction post-U.S. payrolls data,” said Kunal Shah of commodities trader Nirmal Bang Commodities in Mumbai.

·         “We are also seeing some bargain buying. But gains are not going to be sustained, and in the near-term gold is expected to remain under pressure because of the tapering talks in the United States.”

·         Gold prices fell more than 4% in the last two sessions after better-than-expected U.S. jobs figures bolstered expectations for an early tapering of the Federal Reserve’s economic support measures.

·         Two Fed officials said the U.S. economy is growing rapidly and while the labour market still has room for improvement, inflation is already at a level that could satisfy one leg of a key test for the beginning of interest rate hikes.

·         Investors now shift their focus to U.S. consumer inflation data due on Wednesday.

·         Though gold is viewed as a hedge against higher inflation, a Fed rate hike would dull its appeal as it increases the opportunity cost of holding the non-yielding metal.

·         Offering some respite to gold, the dollar index was broadly flat after solid gains in the last two sessions. A stronger dollar makes gold more expensive to holders of other currencies.

·         Spot gold may revisit its Monday low of $1,684.37 per ounce, driven by a wave C, according to Reuters technical analyst Wang Tao.

·         Gold gains as dollar takes a breather

Gold prices edged higher on Tuesday, after touching a four-month low in the previous session, as the dollar paused its rally, spurring demand for the safe-haven metal.

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 92.963 following a climb late last week from below 92.4.

 

·         Gold Price Forecast: XAU/USD to suffer a further downfall below $1725

The post-NFP USD strength dragged gold to multi-month lows on Monday. XAU/USD has settled over $40 off daily swing lows and edged higher during the Asian session on Tuesday but is not out of the woods yet, FXStreet’s Haresh Menghani briefs.

 

The fundamental/technical set-up seems tilted in favour of bearish traders

“The fundamental backdrop remains tilted in favour of bearish traders and any meaningful recovery attempt might still be seen as a selling opportunity.”

“Weakness below the $1,725 level will reaffirm the negative outlook and turn the commodity vulnerable to accelerate the decline back to the $1,700 round figure. Some follow-through selling will set the stage for a slide towards challenging YTD lows, around the $1,677-76 area.”

“The $1,750-60 support breakpoint now seems to have emerged as immediate strong resistance. Any further recovery attempt is more likely to meet with some fresh supply and runs the risk of fizzling out rather quickly near the $1,780 region. The latter should cap the XAU/USD and now act as a key pivotal point for short-term traders.”

 

·         Hedge funds take cautious steps in precious metals CFTC data

Significant uncertainty regarding the health of the labor market prompted hedge funds and money managers to walk a cautious path through the gold market, according to some analysts after reviewing the latest trade data from the Commodity Futures Trading Commission.

Some analysts have noted that the gold market has been directionless for most of July, caught in a tight range due to shifting expectations regarding U.S. monetary policy. That trend continued last week as Hedge Funds positioned ahead of Friday's employment data. Economists noted growing sentiment that a stronger than expected nonfarm payrolls report could lay the groundwork for the Federal Reserve to taper its monthly bond purchase program.

The CFTC disaggregated Commitments of Traders report for the week ending July 27 showed money managers decreased their speculative gross long positions in Comex gold futures by 1,285 contracts to 132,920. At the same time, short positions increased by 1,642 contracts to 43,047.

 

·         U.S. infrastructure plan to boost metals demand but unlikely to 'supercharge the commodity cycle,' says ANZ

The highly anticipated U.S. infrastructure plan will boost demand for metals but is unlikely to "supercharge the commodity cycle," said Australia and New Zealand Banking Group (ANZ) in a report.

"The U.S. infrastructure plan should, on the face of it, accelerate the country's economic recovery. It is likely to boost demand for metals but probably won't supercharge the commodity cycle in the way many have hoped," said ANZ commodity strategists Daniel Hynes and Soni Kumari.

The report examined the impact of the $1 trillion U.S infrastructure bill, which seems to be inching closer to finally being passed. The bill is the top priority for U.S. President Joe Biden, and its prospects are looking quite promising with the weekend progress at the Senate.

 

·         Elsewhere, silver gained 0.8% to $23.62 per ounce after falling to an eight-month low on Monday.

·         Platinum gained 1% to $989.65 and palladium rose 0.7% to $2,618.71.

 

·         Treasury yields little changed ahead of inflation data, infrastructure vote

U.S. Treasury yields were little changed early on Tuesday, as investors digested jobs data and comments from Federal Reserve officials, while awaiting key inflation readings later this week.

The yield on the benchmark 10-year Treasury note slipped 14 basis points to 1.3152%, while the yield on the 30-year Treasury bond hovered around the flatline at 1.9617%. Yields move inversely to prices.

 

·         Japan's SoftBank reports 39% fall in Q1 net profit

Japan’s SoftBank Group Corp on Tuesday reported a 39% fall in first-quarter net profit, even as Vision Fund returns were boosted by listings during the period.

 

·         China’s Covid lockdown could have economic costs to the world, says strategist

China has tightened Covid-19 measures to combat an uptick in daily cases — a move that could hold back the country’s economic growth and hit its stock markets, said veteran strategist David Roche.

“Markets have got into the mode of thinking Covid is very ... bad, but economic recovery (is) taking away lockdowns, removing social restrictions — that’s kind of the world recipe at the moment,” Roche, president and global strategist at Independent Strategy, told CNBC’s “Street Signs Asia” on Tuesday.

 

China effect on the global economy

Any disruptions in the Chinese economy could affect global economic growth, said Roche.

The strategist explained that broader lockdowns across China could interrupt global supply chains – much of which are located in the country.

That could hit international trade, increase the costs of some goods, and raise inflation expectations around the world, he added.

Roche expects China’s year-on-year growth in the third quarter to slow to between 2% and 3% from the second quarter’s 7.9% expansion.

Over the longer term, China’s economic growth will settle at around 5% to 6%, according to Roche.

 

 

·         China court upholds Canadian's death sentence as Huawei CFO fights extradition

 

 

·         Philippine economy returns to growth in second quarter, but COVID-19 clouds outlook

The Philippine economy grew at its fastest annual pace in over three decades in the second quarter, rebounding from a COVID-induced slump a year ago, but tighter curbs are clouding the outlook, reinforcing an accommodative monetary stance.

Gross domestic product (GDP) rose 11.8% in the June quarter , the biggest year-on-year expansion since the fourth quarter of 1988, the statistics agency said on Tuesday.

 

 

·         U.N. climate report depicts fast-warming world where 'nobody is safe'

A flagship U.N. science report on Monday showed no one is safe from the accelerating effects of climate change and there is an urgent need to prepare and protect people as extreme weather and rising seas hit harder than predicted.

 

·         North Korea says U.S., South Korea will face new threats for military drills

South Korea and the United States will face even greater security threats for going ahead with annual joint military drills due to begin this week, Kim Yo Jong, a powerful North Korean official and sister of leader Kim Jong Un, said on Tuesday​.
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South Korea and the United States began preliminary training on Tuesday with larger, computer-simulated exercises scheduled for next week, the Yonhap news agency reported, despite nuclear-armed North Korea's warning that the exercises would set back progress in improving inter-Korean relations.

 

 

·         Fully vaccinated people are still getting infected with Covid. Experts explain why

For a start, none of the vaccines being deployed in the U.S. or Europe are 100% effective at preventing infection.