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Gold edged up on Tuesday, pausing its steep sell-off on some lingering doubts over the economic impact of the new Delta COVID-19 variant, though a rally in the dollar and bond yields continued to grip the market.

·         Spot gold rose 0.1% to $1,730.93 per ounce by 1:37 p.m.

·         U.S. gold futures settled up 0.3% at $1,731.70.

·         The precious metal slid as much as 4.4% on Monday, as expectations the U.S. Federal Reserve could begin tempering its economic support sooner than previously anticipated were solidified by a strong U.S. jobs report on Friday.

Though the metal has somewhat recovered from Monday’s lows, it remains pressured by a strengthened U.S. dollar and 10-year benchmark Treasury yields on the back of Fed tapering bets.

·         “Gold will be under pressure in the next couple of months,” said Bart Melek, head of commodity strategies at TD Securities, noting that a continued uptick in real yields along with expectations of Fed tapering would weigh on gold. Higher returns on Treasury bonds increase the opportunity cost of holding gold, which pays no interest.

“The market’s expectation is that economic data will continue to recover in a very firm clip reminiscent of the employment data, but Delta variant concerns could certainly prevent the Fed from wanting to taper sooner rather than later,” Melek added.

·         Delta variant coronavirus cases in several Asian countries and the United States have continued to surge, threatening the economic outlook.

·         In other precious metals, platinum rose 1.8% to $997.84 per ounce.

·         Palladium gained 1.9% to $2,650.25.

·         “Platinum and palladium have been largely driven by their supply and demand dynamics,” said Suki Cooper, analyst at Standard Chartered.

“While we expect the third quarter to present the least tight fundamentals, the platinum palladium group metals are more prone to downside risk in the near term.”

·         Silver fell 0.2% to $23.40 an ounce.

 

·         Rising bond yields could be tied to recent comments from Federal Reserve officials

 

·         Crypto exchange Coinbase trading volumes jump over 1,500%

 

·         Fed's Evans: Wants "few more" job reports before bond taper

The current inflation spike shouldn't push the Federal Reserve to tighten monetary policy prematurely, with more months of labor data needed before any changes as well as more certainty that the pace of price increases will remain above the Fed's 2% target, Chicago Fed president Charles Evans said on Tuesday.

 

·         Fed's Rosengren: Stimulus wind down to begin by fall

The bond buying has been intended to lower longer-term interest rates and encourage borrowing and spending

The president of the Federal Reserve Bank of Boston added his voice Monday to a growing number of people, inside and outside the Fed, who say the central bank should soon begin to dial back its extraordinary aid for an economy that is strongly recovering from the pandemic recession.

Eric Rosengren said in an interview with The Associated Press that the central bank should announce in September that it will begin reducing its $120 billion in purchases of Treasury and mortgage bonds "this fall." The bond buying, which the Fed initiated after the coronavirus erupted in March of last year, has been intended to lower longer-term interest rates and encourage borrowing and spending.

 

·         Fed’s Bostic urges fast taper as US economy strengthens

The US Federal Reserve should move to taper its asset purchases after another strong month or two of employment gains, and proceed with that scaling-back process faster than in past episodes, US Federal Reserve Bank of Atlanta President Raphael Bostic said on Monday.

 

·         U.S. Senate pivots to $3.5 trillion bill, key to Biden's agenda

The Democratic-controlled U.S. Senate on Tuesday passed a massive infrastructure bill and immediately kicked off debate on a $3.5 trillion spending blueprint for President Joe Biden's key priorities on climate change, universal preschool and affordable housing.

 

·         U.S. productivity growth slows in Q2; labor costs revised down in Q1

 

·         U.S. small business optimism drops as labor shortages persist

Small business owners across the United States grew less confident in the economic recovery in July as labor shortages remained an issue, according to a survey released on Tuesday.

The National Federation of Independent Business (NFIB) Optimism Index fell 2.8 points to a reading of 99.7 in July, almost erasing all of June’s gain. Six of the 10 index components declined, three improved and one was left unchanged.

 

·         Human rights claims undermine China's investment abroad, report finds

China's efforts to be seen as a responsible investor overseas are at risk from high rates of human rights abuses linked to its business operations, especially in the metals and mining sector, a report released on Wednesday found.

The Business & Human Rights Resource Centre, a global nongovernmental organisation (NGO), logged 679 charges of human rights abuse against Chinese companies operating abroad between 2013 and 2020.

 

·         U.S.-China tension means emerging market investors need to get selective, strategist says

Emerging market assets are highly sensitive to the increased prospects of tapering from the U.S. Federal Reserve and geopolitical tensions between the U.S. and China, according to Ozan Ozkural, managing partner at Tanto Capital Management.

Treasury yields rose sharply on Monday as Fed officials hinted that a slowing of the central bank’s asset purchases could be necessary this year, while opening the door to discussion over potential hikes to interest rates.

Investors often seek out emerging market debt and other assets when searching for yield in an environment where major government bond yields are historically low, and Ozkural suggested that there will still be a “hunt for yield” should another taper tantrum hit. 

 

·         Singapore Q2 GDP up 14.7%, 2021 forecast raised

·        South Korea July jobless rate falls for a second month

·         UN climate report increases urgency for green investment funds

Dire warnings about climate change are a call to action for investors who put their money into helping the environment. But the news also heightens a debate about how to make these strategies effective, financial executives said.

A U.N climate report on Monday found that global warming is dangerously close to spiraling out of control. Even the most severe carbon emission cuts are unlikely to prevent global warming of 1.5 degrees Celsius above preindustrial temperatures by 2040, a level that many scientists believe must be achieved to avert catastrophic climate change.

 

·         N.Korea warns of 'security crisis' if U.S., S.Korea escalate tensions

 

·         COVID-19 UPDATES:

 

 

 

·         World Covid Dispatch: Delta variant now constitutes 92% of Thai infections

Delta variant of coronavirus make up 92 per cent cases in Thailand, China's latest Covid outbreak continues to expand, with more than 100 symptomatic cases reported on Tuesday

 

·         Australia's Victoria state reports steady rise in COVID-19 cases

 

·         Pfizer shares hit record high with COVID-19 vaccine stocks on a tear