Gold pulls back as dollar strengthens, caution sets in
· Gold prices slipped, after touching a near a four-week high earlier on Monday, as the dollar ticked up from its lows and investors showed caution in the run-up to the release of a key U.S. jobs report later in the week.
· Spot gold fell 0.4% to $1,808.67 per ounce by 1:33 p.m. ET after touching its highest level since Aug. 4. U.S. gold futures settled down 0.4% at $1,812.2.
· Gold initially rose on Monday in the wake of U.S. Federal Reserve Chair Jerome Powell’s speech to the annual Jackson Hole economic conference on Friday.
· Powell said tapering of the U.S. central bank’s bond-buying program could happen this year but gave no indication as to the exact timeline for the Fed to start cutting its asset purchases, sending gold higher.
· However, gold then fell as the dollar index, which had slipped to nearly a two-week low in the wake of Powell’s speech, attempted a rebound.
· “The marketplace is starting to get a sense that there will be some tapering this year but maybe not with the aggressiveness that would spook the marketplace,” said Jim Wyckoff, senior analyst at Kitco Metals.
· Wyckoff, however, said that caution ahead of the scheduled release on Friday of the U.S. nonfarm payrolls report could weigh on gold this week, with a strong number potentially giving hawkish Fed officials more leverage in arguing for a move away from ultra-easy monetary policy.
· Higher interest rates increase the opportunity cost of holding non-yielding bullion.
· Carsten Menke, head of next generation research at Julius Baer, said comments made at the Jackson Hole conference should have no “fundamental” impact on gold and silver.
· “We remain very much convinced about a continued economic recovery and a temporary inflation spike, leading gold and silver prices somewhat lower,” Menke said, noting that inflation and the economic recovery were key drivers for the market.
· Silver fell 0.3% to $23.93 per ounce, platinum dropped 0.3% to $1,004.48 and palladium rose 2.5% to $2,479.50.
· U.S. pending home sales decline in July
Contracts to purchase previously owned U.S. homes declined for the second consecutive month in July in step with limited supply that’s been unable to keep up with demand from potential homebuyers.
The National Association of Realtors (NAR) said on Monday its Pending Home Sales Index, based on contracts signed last month, fell 1.8% after dropping a revised 2.0% in June. Economists polled by Reuters had forecast pending home sales would increase 0.4%.
· Euro zone sentiment eases more than expected in August
Euro zone economic sentiment eased more than expected in August from a record high in July, hit by a sharp drop in optimism in France and the Netherlands, while selling price expectations peaked.
The European Commission’s economic sentiment index, released on Monday, eased to 117.5 in August from an all-time high of 119.0 in July. Optimism deteriorated in all major sectors — in industry to 13.7 from 14.5, in services to 16.8 from 18.9 and among consumers to -5.3 from -4.4.
· German inflation hits fresh 13-year high in August
Germany’s annual consumer price inflation accelerated to a fresh 13-year high in August, data showed on Monday, underlining growing price pressures as Europe’s largest economy recovers from the pandemic and companies struggle with supply shortages.
The national inflation rate (CPI) even soared to 3.9% in August, hitting its highest since December 1993 when the economy boomed following German reunification.
· Germany's Jan-June oil imports dropped by 10% year on year
German crude oil imports in January through June fell 10% year on year as the COVID-19 pandemic and related lockdowns hit industry, official data showed
· China August factory activity seen growing at slightly slower pace: Reuters poll
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U.S. and global equity benchmarks hit all-time highs on Monday, as the Federal Reserve appeared in no rush to step away from its massive stimulus, while U.S. oil prices edged higher in choppy trading.
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