Gold hit a one-week high on Tuesday, as the dollar retreated after a slower-than-expected rise in U.S. inflation led to uncertainty over the U.S. Federal Reserve’s timeline to taper monetary stimulus.
· Spot gold rose 0.6% to $1,803.69 per ounce by 1835 GMT, and U.S. gold futures settled up 0.7% at $1,807.10 per ounce.
· “Gold is toying with $1,800/oz following the marginally weaker-than-expected U.S. inflation data,” said Suki Cooper, precious metals analyst at Standard Chartered Bank, adding “the macro backdrop remains conducive for further price gains.”
· Consumer prices post smaller-than-expected increase in August
Prices for an array of consumer goods rose less than expected in August in a sign that inflation may be starting to cool, the Labor Department reported Tuesday.
The consumer price index, which measures a basket of common products as well as various energy goods, increased 5.3% from a year earlier and 0.3% from July. A month ago, prices rose 0.5% from June.
· “While a tapering announcement is unlikely until the November FOMC meeting, the September meeting will introduce the staff forecasts, or ‘dots’ for 2024. The 2024 dots could mirror 2023′s two rate hikes,” Cooper added.
· The inflation data could reinforce the view that the Fed may go slow on unwinding economic support measures and keep interest rates low. Lower interest rates decrease the opportunity cost of holding non-yielding bullion.
· This (U.S. data) miss is “good news for bullion”, as it makes a September taper announcement from the Fed less likely, said Ed Moya, senior market analyst at brokerage OANDA.
· Among other metals, palladium dipped 5.4% to $1,973.47 per ounce, its lowest since July 2020, and platinum fell 2.1%, to $941.06 per ounce.
Palladium has dropped nearly 20% so far in September.
· “Supply chain weakness effecting particularly chips and car manufacturing is having a depressing effect on the platinum group metals,” independent analyst Ross Norman said, adding that while the supply disruptions persist, prices were likely to be pressured.
· Silver rose 0.5% to $23.84 per ounce.
· Dollar falters after U.S. inflation rise eases, safe-haven yen, franc up
The dollar index was slightly down at 92.601, moving away from a more than a two-week high on Monday.
The euro was flat against the dollar at $1.1807.
· TREASURIES-U.S. yields fall after inflation shows signs of cooling
The yield on the benchmark 10-year note dropped more than 6 basis points on the day to a low of 1.263%, the lowest reading since Aug. 24. The core measure of U.S. consumer prices edged up 0.1% last month, the smallest gain since February.
· White House welcomes inflation data, still concerned about U.S. housing prices
· The Fed will hold a two-day monetary policy meeting next week, with investors keen to find out whether a tapering announcement will be made.
Several Fed officials have suggested the U.S. central bank could reduce its buying of debt securities by the end of the year, but said an eventual interest rate hike would not happen for some time.
Tapering tends to benefit the dollar as it suggests the Fed is one step closer toward tighter monetary policy. It also means the central bank will be buying fewer debt assets, effectively reducing the number of dollars in circulation.
· Democrats' tax plan would cut bills for most Americans -congressional estimate
U.S. tax code changes sought by Democrats in the House of Representatives to help fund $3.5 trillion in domestic investments would cut annual tax bills for Americans earning less than $200,000 a year through 2025, a congressional estimate showed on Tuesday.
· Biden failed to secure summit with China's Xi in call last week -FT
President Joe Biden proposed a first face-to-face summit with his Chinese counterpart, Xi Jinping, in a call last week, but failed to secure an agreement, the Financial Times reported on Tuesday, an account later denied by the White House.
The Financial Times cited multiple people briefed on last Thursday's 90-minute call as saying Xi did not take Biden up on the offer and instead insisted that Washington adopt a less strident tone toward Beijing.
· South Korea's August jobless rate falls to record low
· Japan manufacturers' mood falls to 5-month low in Sept - Reuters Tankan
· Japan July core machinery orders rise 0.9% month/month
· Oil settles unchanged as latest storm spares U.S. energy sector
Oil prices ended largely unchanged on Tuesday as tropical storm Nicholas brought heavy rain and power outages in Texas but caused less damage to U.S. energy infrastructure than Hurricane Ida caused earlier this month.
Brent crude settled up 9cents to$73.60 a barrel after hitting a session high of $74.28. U.S. West Texas Intermediate (WTI) crude settled up 1 cent, at $70.46, after touching a high of $71.22.
More than 39% of the U.S. Gulf of Mexico's production of crude and natural gas remained shut on Tuesday, the regulator Bureau of Safety and Environmental Enforcement (BSEE) said. Nicholas made landfall in Texas on Monday and was to reach Louisiana on Wednesday, bringing more floods and heavy rains to the Gulf's oil facilities.
· COVID-19 UPDATES:
· Australia's Victoria state nears first COVID-19 vaccination goal
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