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Gold (XAU/USD) struggles to extend the previous day’s recovery moves, the biggest run-up since early May, taking rounds to $1,750 ahead of Thursday’s European session. Gold prices seesaw in a choppy range as bulls seek fresh clues to copy the previous day’s heavy rise.

 

Also challenging the metal’s rise could be the latest chatters surrounding Fed tapering and rate hikes. Recently, Federal Reserve Bank of San Francisco President Mary C. Daly said, per the Financial Times, “Tapering of asset purchases could start as soon as this year.”

 

Kansas City Fed President Esther George teased early tapering the previous day while also citing a long way for the monetary policy adjustments. On the same line were Dallas Fed President Robert Kaplan and Richmond Fed President Thomas Barkin.

 

Additionally, a battle between the covid woes and the vaccine drive also confuses gold traders. While the virus infections are recently on the rise, the NBC news said that the US Food & Drug Administration (FDA) braces for the third vaccine dose for immunocompromised people.

 

It should be noted that the US Dollar Index (DXY) remains on the back foot after easing from the highest since April on Wednesday, down 0.02% intraday near 92.88. The greenback’s sluggish moves could be linked to the subdued S&P 500 Futures but not the US 10-year Treasury yields that stay firmer to regain 1.35% level by the press time.

 

 

Meanwhile, a downside break of $1,745, comprising the stated DMA, will find multiple supports near $1,720 and the $1,700 round figure.

 

In a case where gold bears remain dominant past $1,700, an ascending trend line from early March and the yearly bottom, respectively around $1,688 and $1,676, will be in focus.

 

·       Gold prices dropped this week and analysts predict they will keep falling

“The initial sell‑off in the gold price on Monday was likely triggered by the Asian market buying the US dollar and selling gold in response to the strong US payrolls for July from last Friday,” Vivek Dhar, commodities analyst at the Commonwealth Bank of Australia, said in a note on Wednesday.

While gold has since recovered some losses, Dhar said it was “difficult to remain bullish on the precious metal,” given the hawkish outlook for U.S. monetary policy.

“A stronger US dollar combined with a gradual increase in US 10 [year] real yields suggest that gold prices should trend lower,” Dhar wrote.

He predicts that gold prices will fall to $1,700 per ounce by the first quarter of 2022. Schnider forecast that gold could see drops to $1,600 per ounce or lower.

 
·       Inflation was hot in July, but rent isn’t showing up yet and could drive prices higher

Economists say there are signs the spike in inflation is temporary, as Federal Reserve officials have contended. But one big part of consumers’ out-of-pocket expenditures is rent, and that is expected to rise well into the future.

·       Analysis: Investors renew focus on Fed following signs inflation may have peaked

Data on Wednesday hinted that U.S. inflation may have peaked, reassuring investors that the Federal Reserve will not feel obligated to hasten plans to rein in emergency-level support of the economy, but they remained worried that rising prices could continue to weigh on everything from bond prices to corporate margins.

 

Forex Today: Dollar on the defensive with yields after US CPI-led blow, awaits PPI

 

The record-run on Wall Street failed to inspire the Asian traders, as the region’s indices trade in the red amid widening regulatory curbs from China and escalating tensions over the impact of the Delta covid variant on the economic growth. China released a five-year plan calling for greater business regulation as Beijing pursues a crackdown, per Bloomberg. The futures tied to the S&P 500 index also trade marginally lower on the day.

 

The American dollar remains on the back foot across the board, consolidating the US inflation-led drop while the Treasury yields also lick their wounds. Easing Fed’s tapering expectations and strong US bond auction knocked off the yields alongside the dollar on Wednesday.

·       The dollar index , which measures the greenback against a basket of six rivals, was little changed at 92.890, following a 0.19% decline from Wednesday, when it rose as high as 93.195, a level not seen since April 1.

EUR/USD is holding the higher ground, looking to extend the recovery above 1.1750 while GBP/USD keeps its range below 1.3900 amid looming Brexit concerns and downbeat market mood, which weighs on the higher-yielding pound.

·       Fed may begin tapering as soon as October

CNBC’s Mike Santoli and Ritholtz Wealth Management’s Josh Brown join Closing Bell to discuss the potential of a Federal Reserve taper in the next few months. “I don’t think today’s inflation number altered the equation very much,” Santoli tells Courtney Reagan.

·       Seeing early signs inflation will remain transitory, says economist*

Michael Farr, Farr, Miller and Washington president and CEO, and Lindsey Piegza, Stifel chief economist, join ‘Power Lunch’ to discuss if inflation is here is to stay and what it means for investors.

·       China signals crackdown on privacy, data, anti-trust to go on

China will draft new laws on national security, technology innovation, monopolies and education, as well as in areas involving foreigners, the national leadership said in a document published late on Wednesday.

The announcement signals that a crackdown on industry with regard to privacy, data management, antitrust, and other issues will persist on through the year.

·       Oil prices steady after U.S. call for more oil raises supply concerns

Oil prices were steady on Thursday following two days of gains after a call from the United States, the world’s top oil consumer, for major producers to boost output reinforced supply concerns as economies ease their coronavirus restrictions.

Brent crude futures edged higher by 5 cents to $71.49 a barrel by 0216 GMT while U.S. West Texas Intermediate (WTI) crude futures gained by 4 cents to $69.29.

 

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