Gold rises as U.S. inflation readings cool early Fed taper bets
· Gold prices jumped on Wednesday after tame U.S. consumer price data eased fears that the Federal Reserve would taper its economic support sooner than expected.
· Spot gold rose 1.4% to $1,752.46 per ounce by 2:07 p.m. ET. U.S. gold futures settled up 1.2% at $1,753.30.
· A strong U.S. jobs report last week hammered bullion and kept it well below the key $1,800 mark as investors worried the Fed might taper soon.
· But data on Wednesday showed the U.S. consumer price index in July rose in line with expectations, which eased those concerns and buoyed gold, said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.
· “An inflation number that’s in line leaves the Fed scratching their heads and has them more on a wait-and-see-and-interpret-
· “The gold market is not going back up ’til $1,835, but I don’t think the bottom is going to fall out yet,” he added.
· Michael Matousek, head trader at U.S. Global Investors, noted that inflation remained at a 13-year high on a yearly basis in July, and said persistent inflation could drive gold’s price higher even in the face of an interest rate hike.
· “Initially when people hear about rate hikes, they don’t want to own gold because they think that’s going to stop inflation, but inflation is like a freight train, once it gets going, it’s very difficult to turn it around.”
· Elsewhere, silver rose 1% to $23.55 an ounce, platinum rose 2.5% to $1,020.07, while palladium fell 0.3% to $2,633.90.
· TREASURIES-U.S. yields mostly slip after strong auction, inflation data
In late afternoon trading, the yield on 10-year Treasury
notes was down 1.5 basis points at 1.327%. Earlier
in the session, the 10-year yield hit a four-week high of 1.378%
· Dollar falls as U.S. consumer price rises temper in July, data show
The dollar fell on Wednesday after U.S. inflation data showed consumer price increases eased in July, taking some pressure off the Federal Reserve to begin scaling back the monthly bond purchases that are part of its toolbox to support the economic recovery.
The dollar index, which measures the greenback against a basket of other major currencies, was down 0.17% at 92.915 at 3:05 p.m. ET.
While prices are still rising, the Fed has said it expects inflationary pressures to moderate over time as supply catches up with demand following months of Covid-19 lockdowns.
In Europe, investor sentiment has declined, with a survey showing a third straight month of deterioration in Germany as rising global Covid-19 cases keep markets on edge.
The euro gained 0.16% against the greenback, to 1.17395, following six straight sessions of losses and having fallen as low as 1.1706 in early deals in Europe, near the year’s low of $1.1704.
Sterling gained 0.2% to 1.38645 against the dollar, pulling back from a two-week low.
The yen was up 0.12% at 110.445, after dropping for five consecutive sessions against the dollar.
South Korea reported a record number of Covid-19 cases on Wednesday, while outbreaks in China, Southeast Asia and Australia grow steadily.
· In cryptocurrencies, bitcoin touched $46,787.60, its highest since May 17.
Bitcoin was last up 1.5% at $46,304.54, while ether, the second-biggest cryptocurrency, was up 2.7% at $3,226.18.
· U.S. July budget deficit hits $302 billion as spending remains high
· Fed should announce bond taper in September, begin it in October, says Dallas Fed President Kaplan
Dallas Federal Reserve President Robert Kaplan said Wednesday that the central bank should begin to taper its monthly purchases of Treasury bonds and mortgage-backed securities in October.
His view that the central bank ought to begin cutting back in two months is perhaps the most ambitious from a Fed president to date.
· White House calls on OPEC to boost oil production as gasoline prices rise
The White House is calling on OPEC and its oil-producing allies to boost production in an effort to combat climbing gasoline prices, amid concerns that rising inflation could derail the economic recovery from Covid.
Biden administration officials spoke with representatives from OPEC’s de facto leader Saudi Arabia this week, as well as with representatives from the United Arab Emirates and other OPEC+ members.
· Democratic divisions emerge on U.S. Senate's $3.5 trillion spending plan
Hours after the U.S. Senate approved a $3.5 trillion budget blueprint chock-full of investments in new domestic programs, fissures emerged between the moderate and liberal wings of the Democratic Party over the size and scope of the spending.
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