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Gold prices ease as global equities climb on Fed's dovish stance

 

·         Gold prices edged lower on Monday, as risk appetite got a boost after U.S. Federal Reserve chief Jerome Powell assuaged market fears of a quick withdrawal of pandemic-era stimulus, dampening bullion's safe-haven appeal.

 

·         Spot gold was down 0.2% at $1,813.76 per ounce, as of 0727 GMT. Earlier in the session, bullion scaled to its highest since Aug. 4 at $1,822.92.

 

·         U.S. gold futures edged 0.2% lower to $1,816.50.

 

·         "People are more interested in equity markets, but in case of a correction we may see a sharp rise in gold prices," Vandana Bharti, assistant vice-president, commodity research at SMC Comtradem said, adding that $1,917-$1,940 should be a major resistance for the rest of 2021.

 

·         In a virtual speech at the Jackson Hole economic conference, Powell offered no signal on when the central bank plans to cut its asset purchases beyond saying it could be "this year" and indicated it would remain cautious in any eventual decision to raise interest rates.

 

·         Powell's dovish statement helped gold gain 1.4% on Friday, while pushed the dollar index to a two-week low.

 

·         "The market is starting to re-adjust expectations for U.S. rate hikes after Powell's speech on Friday, which was the green light for gold to move higher," Stephen Innes, managing partner at SPI Asset Management said.

 

·         While gold is considered a hedge against inflation and currency debasement in the wake of massive stimulus measures, lower interest rate also reduces the opportunity cost of holding the non-yielding bullion.

 

·         Investors' will now keep an eye out for the U.S. nonfarm payroll data for August due on Friday.

 

·         "Gold prices would again need to overcome the ominous $1,839 resistance before more additional buying would emerge," Avtar Sandu, a senior commodities manager at Phillip Futures, said in a note.

·         Silver eased 0.2% to $23.95 per ounce, while platinum dipped 0.1% to $1,006.76. Palladium dropped 0.4% to $2,409.10.

 

 

·         Dollar pinned as Powell plods toward tapering

 

The dollar loitered around multi-week lows on Monday in the wake of Federal Reserve Chair Jerome Powell laying out a slower-than-expected path to rate hikes, as traders’ focus shifted to U.S. jobs figures due on Friday for clues on a tapering timeline.

 

The dollar index dropped about 0.4% following his comments and was little changed on Monday at a two-week low of 92.595. The Australian dollar edged lower to $0.7304 and the kiwi dipped marginally to $0.7005. [AUD/]

 

The greenback has fallen since Powell said on Friday that tapering could begin this year but that it wouldn’t directly signal higher rates, as hiking would need the economy to pass a substantially more stringent test.

 

“Powell was vague on the timing of tapering, and his reiteration that it is separate from a decision to raise rates was read to imply that there’d be a gap,” ANZ analysts said in a note.

 

 

 

·         China August factory activity seen growing at slightly slower pace: Reuters poll

 

Growth in China’s factory activity likely cooled further in August, a Reuters poll showed on Monday, as COVID-related restrictions and high raw material prices continued to pressure manufacturers and the economy lost momentum.

 

The official manufacturing Purchasing Manager’s Index (PMI)is expected to slip to 50.2 in August from 50.4 in July, a fifth month of slowing growth, according to the median forecast of 33 economists polled by Reuters. A reading above 50 indicates expansion from the previous month.

 

·         Australia considering new laws for Apple, Google, WeChat digital wallets

The Australian government is considering new laws that would tighten the regulation of digital payment services by tech giants such as Apple and Alphabet’s Google.

 

·         New Zealand's Auckland stays in lockdown, officials report Pfizer-linked death

New Zealand Prime Minister Jacinda Ardern on Monday extended a lockdown in Auckland by two weeks, while officials reported the country's first death linked to the Pfizer-BioNTech COVID-19 vaccine.

 

·         Japan's Moderna vaccine contamination woes widen as 1 million more shots withdrawn

Moderna Inc's COVID-19 vaccine contamination woes in Japan have widened with another million doses being suspended, after foreign substances were found in more batches and two people died here following shots from affected lots.

 

·         Indonesia schools start cautious reopening after devastating virus wave

Indonesia’s capital Jakarta reopened 600 of its schools on Monday as coronavirus restrictions eased, though a teacher federation urged caution and warned of clusters in classrooms caused by the highly transmissible Delta variant.

 

·         Uzbekistan ready to help Germany with Afghanistan evacuations, minister says

Uzbekistan is willing to open its borders to people fleeing from Taliban rule in Afghanistan who are on a German list of those at-risk in the country and need to be evacuated, German Foreign Minister Heiko Maas told journalists on Monday.

 

·         France, UK to propose Kabul ‘safe zone’ to UN, Macron says

France, Germany and the United Kingdom are working on a United Nations proposal aimed at establishing a safe zone in Kabul to allow safe passage for people trying to leave Afghanistan, French President Emmanuel Macron said on Sunday.

 

·         Oil drops after Hurricane Ida hits U.S. Gulf rigs, refineries

Oil prices reversed gains on Monday, pulling back from more than three-week highs reached earlier in the session, as a powerful hurricane slammed into the U.S. Gulf coast, forcing shutdowns and evacuations of hundreds of offshore oil platforms. 

Brent was down 16 cents or 0.2% at $72.54 a barrel by 0654 GMT. It rose more than 11% last week in anticipation of disruptions to oil production from Hurricane Ida.

 

U.S. oil was down by 49 cents or 0.7% at $68.25 a barrel, having jumped a little over 10% over last week.

 

 

 

 

·         Asia-Pacific stocks rise; Australia shares recover from earlier slip as Covid infections spike

In Japan, the Nikkei 225 advanced 0.54% to close at 27,789.29 while the Topix index gained 1.11% to 1,950.14. South Korea’s Kospi ended the trading day up 0.33% at 3,144.19.

Mainland Chinese stocks were mixed on the day as the Shanghai composite rose 0.17% to 3,528.15, while the Shenzhen component dipped fractionally to 14,423.37. Hong Kong’s Hang Seng index closed 0.52% higher at 25,539.54. 

The S&P/ASX 200 in Australia closed 0.22% higher at 7,504.50. The country’s most populous state New South Wales had reported on Monday a record one-day rise in new Covid-19 infections, according to Reuters.

 

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.91%.

 

 

 

The pan-European Stoxx 600 index opened 0.1% higher with most sectors in positive territory apart from banks, healthcare, insurance, telecoms and travel and leisure. U.K. markets are closed for a public holiday.

 

A positive start to the trading week in the final days of August reflects sentiment elsewhere, with U.S. stock futures steady in overnight trading on Sunday, and shares higher in Asia-Pacific.

 

 

Reference: CNBC, Reuters