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Gold falls as dollar gains some ground while Fed symposium is in focus

 

·         Gold prices fell on Wednesday as the dollar ticked higher, with investors awaiting Federal Reserve Chair Jerome Powell’s speech this week for possible guidance on tapering of the pandemic-era stimulus.

 

·         Spot gold fell 0.4% to $1,796.03 per ounce by 106 GMT, while U.S. gold futures 0.6% to $1,797.50.

 

·         The dollar index inched 0.1% higher, denting gold’s appeal for those holding other currencies.

 

·         Goldman Sachs economists have raised the odds that the Fed will announce the start of tapering its bond purchases in November, predicting the central bank will likely opt to dial back purchases by $15 billion then and at meetings that follow.

 

·         Focus will now be on Powell’s speech at the Fed’s annual economic symposium at Jackson Hole, Wyoming, on Aug. 27 and whether he gives a timeline on the stimulus withdrawal.

 

·         The United States could get Covid-19 under control by early next year if vaccinations ramp up, Dr. Anthony Fauci said on Tuesday, with the country now averaging 1,000 Covid deaths a day and over 150,000 new cases.

 

·         SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.2% to 1,004.63 tons on Tuesday from 1,006.66 tons on Monday.

 

·         "The higher equity markets, the risk-on narrative... (are) really diminishing the need for gold as a hedge," said Stephen Innes, managing partner at SPI Asset Management.

The Fed is likely to "talk about the concept of tapering, but they won't give a timeline," IG Market analyst Kyle Rodda said.

"Everyone is willing to take a punt that they're going to maybe take a softer stance to tapering this weekend, and it's a good thing for gold."

 

·         Spot gold may retreat to $1,773

Spot gold may retreat to $1,773 per ounce, as it failed to break a resistance at $1,800 and a falling trendline.

The failure could have triggered a drop towards $1,773. But more than that, it may have done a big damage to the rise from $1,684.37.

It is doubtful that the rise could extend further into $1,828-$1,862 range. Quite likely, the rise is over. The downtrend form $1,916.40 may have resumed.

A rise above the Tuesday high of $1,809.46 could be extended into the range of $1,828-$1,862. A closer examination on the wave structure of the rise on the hourly chart suggests the completion of a five-wave cycle.

The bearish divergence on RSI confirms the completion. Gold could be falling towards the bottom of the wave (4) around $1,775, close to $1,773 on the daily chart. Only a break above $1,811 could signal the extension of the uptrend towards $1,827-$1,837 range.

 

·         Silver eased 0.4% to $23.73 per ounce, while platinum fell 0.5% to $1,005.97.

·         Palladium was down 0.6% to $2,459.89.

 

·         German exports to China fall for first time in nearly a year

German exports to China declined for the first time in nearly a year in July, easing by 3.9% year-on-year to 8.4 billion euros ($9.9 billion), the statistics office said on Wednesday.

 

·         The U.S. is reviewing its trade policy with China, says USTR Katherine Tai

Seven months since U.S. President Joe Biden took office, his administration has yet to establish a trade policy with China.

U.S. Trade Representative Katherine Tai said Tuesday the “Biden-Harris Administration and USTR are conducting a comprehensive review of U.S.-China trade policy,” according to a readout of a virtual meeting with two business associations, the U.S. Chamber China Center Advisory Board and the U.S.-China Business Council.

 

·         China central bank boosts short-term funding

China’s central bank offered 50 billion yuan ($7.72 billion) through seven-day reverse repos into the banking system, bigger than daily injections in recent months, in what traders saw as a bid to support liquidity and lift market sentiment.

China’s central bank boosted short-term funding to ease worries over tightening liquidity amid a faltering recovery, but losses in financial, tech and real estate sectors capped gins.

·         Japan MOF to seek $275 bln for debt servicing for FY2022/23 – draft

 

·         South Korea's youth debt binge shows no sign of slowing as rate hike looms

Analysts polled by Reuters expect the BOK to raise interest

rates on Thursday, even as the country struggles to contain the

spread of the coronavirus outbreak.

 

·         Taiwan central bank says economy not overheating, inflation stable

·         Malaysia's July CPI up 2.2%, misses forecast

Malaysia's consumer prices in Julyrose, less than forecast, 2.2% from a year earlier, government data showed on Wednesday.

July's consumer price index (CPI) was expected to rise 2.9%, according to 16 economists surveyed in a Reuters poll. In June, the index was up 3.4%.

 

·         Australian regulator weighs further payment for order flow restrictions

Australia’s corporate regulator on Wednesday proposed imposition of further restrictions on payment for order flow (PFOF) practices to include arrangements between non-market participant intermediaries.

 

·         Biden says Afghan evacuation on track; humanitarian crisis looms

U.S. President Joe Biden said U.S. troops in Afghanistan faced mounting danger as they pushed to complete evacuations by an Aug. 31 deadline, with aid agencies warning of a looming humanitarian crisis for the population left behind.

 

·         Sydney hospitals battle coronavirus as daily infections hit record

 

·         CDC study shows unvaccinated people are 29 times more likely to be hospitalized with Covid

 

·         Thailand develops robotic system to squeeze out more vaccine doses

 

Reference: CNBC, Reuters, Business Recorder