Gold prices rose on Monday in the run-up to the release of key U.S. economic data including readings on inflation that could dictate the direction of the Federal Reserve’s monetary policy.
· Spot gold rose 0.3% to $1,792.05 per ounce by 1:40 p.m. EDT (1740 GMT), while U.S. gold futures settled up 0.1% at $1,794.4.
· Focus will be on the monthly U.S. consumer price index, the Fed’s preferred gauge of inflation, due on Tuesday. The August retail sales and production figures are also set for release this week.
· Tuesday’s CPI report likely to show inflation continuing to run hot, putting the Fed in tough spot
The consumer price index is expected to come in at a 5.4% year over year pace for August, according to the Dow Jones consensus estimate.
· The Fed’s emphasis is on employment and it is not particularly worried about inflation, presupposing an accommodative stance that is positive for gold, said Bart Melek, head of commodity strategies at TD Securities.
Melek, however, said it could “be tough for gold to take off” as the dollar remains strong, keeping market attention on what the Fed would do at its next meeting from Sept. 21 to 22.
· Gold is seen as a hedge against inflation and currency debasement but also contends with the greenback for safe-haven status.
· The dollar index hit a multi-week high on Monday, raising bullion’s cost for holders of other currencies.
· Cleveland Fed President Loretta Mester said on Friday she would still like the central bank to begin tapering asset purchases this year, joining a chorus of policymakers stating plans to begin scaling back support despite weaker jobs growth in August.
· Citi Research said in a note that it maintained a slightly hawkish bias heading into the Sept. 21 meeting, but a dovish surprise could allow gold to break higher towards $1,900.
· Silver was steady at $23.71 per ounce and platinum rose 0.5% to $960.18, while palladium fell 2.6% to $2,083.46, after hitting its lowest level since August 2020.
· Fed's Harker says FOMC should start tapering soon, hopefully this year
Patrick Harker, president and CEO of the Federal Reserve Bank of Philadelphia, in an interview with the Nikkei:
I am supportive of moving toward a tapering process sooner rather than later. When exactly that happens, the committee needs to decide. I would hope sometime this year we would be able to start the tapering process.
Harker said it would be inappropriate for him to comment when asked about the FOMC making an announcement at the forthcoming meeting (September 20 & 21)
· U.S. August budget deficit falls as revenues recover
The U.S. government on Monday posted a $171 billion budget deficit for August, 15% lower than the $200 billion gap a year ago, as recovery-driven tax receipts grew faster than outlays for COVID-19 pandemic relief programs, the Treasury Department said.
The August deficit was $2 billion less than the average forecast by analysts in a Reuters survey. A U.S. Treasury official said the August budget results would not alter the department's estimates for when Treasury's extraordinary financing measures to avoid breaching the $28.4 trillion debt limit would be exhausted.
US Budget Deficit Hits $2.7 Trillion With One Month Left In Fiscal 2021
Another month, another $171 billion spent by the US government which it doesn't have.
The deficit was the result of a 3.7% increase in spending to $439 billion from $423.2 billion a year ago
· U.S. House Democrats seek to roll back Trump tax cuts for wealthy, corporations
Leading Democrats in the U.S. House of Representatives on Monday proposed a substantial roll-back of former President Donald Trump's tax cuts, including raising the top tax rate on corporations to 26.5% from the current 21%.
Democrats on the powerful House Ways and Means Committee said they will debate legislation this week that would achieve the changes as part of their broader, $3.5 trillion domestic investment plan.
In an attempt to finance the new spending, the Democratic-led committee will debate a proposal to raise $2.9 trillion in revenue over 10 years, according to a document circulated among members of the panel.
· U.S. consumers' inflation expectations highest since 2013, NY Fed says
U.S. consumers’ expectations for how much inflation will change over the next year and the coming three years rose last month to the highest levels since 2013, according to a survey released on Monday by the New York Federal Reserve.
· U.S., South Korea trade chiefs discuss strengthening supply chain
· U.S. Covid cases finally start to dip from latest peak, but delta variant still on the rise in some states
The seven-day average of daily Covid cases is about 144,300 as of Sept. 12, according to data compiled by Johns Hopkins University. That figure is down 12% over the past week and 14% from the most-recent peak in case counts on Sept. 1, when the country was reporting an average of roughly 167,600 cases per day.
· Pfizer’s Covid vaccine could be authorized for children by the end of next month, sources familiar told Reuters.
· Data shows Covid booster shots are ‘not appropriate’ at this time, U.S. and international scientists conclude
An expert review of scientific evidence to date has concluded that Covid-19 vaccine booster shots are not needed at this time for the general public, a group of leading U.S. and international scientists said Monday in the peer-reviewed journal The Lancet.
The conclusion by scientists, including two senior Food and Drug Administration officials and the World Health Organization, came as studies continue to show the authorized Covid vaccines in the U.S. remain highly effective against severe disease and hospitalization caused by the fast-spreading delta variant.
Reference: Zerohedge, CNBC, Reuters, Forexlive, Worldometers
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