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Gold set for second weekly loss as firmer dollar dents appeal

Gold prices were set for a second weekly loss as a firmer dollar dented the metal’s allure for holders of other currencies while investors await a key U.S. Federal Reserve meeting for clues on how soon the central bank will start to taper stimulus.

· Spot gold was flat at $1,754.86 per ounce, as of 0037 GMT on Friday.

Bullion slipped as much as 2.7% on Thursday, and dropped 1.8% so far this week.

· U.S. gold futures fell 0.1% to $1,755.00.

· The Federal Open Market Committee’s two-day policy meeting is due to be held on Sept. 21-22 and could provide clues as to when the U.S. central bank will start withdrawing its asset purchases.

· Reduced central bank stimulus tends to lift bond yields, which raises the opportunity cost of holding non-interest bearing gold. It also helps boost the dollar, further weighing on bullion.

· Economists in a Reuters poll pushed their expectations back to November for when the U.S. Federal Reserve could began tapering, as surging Delta variant cases likely derailed an economic recovery in the third quarter.

· European Central Bank chief economist Philip Lane revealed in a private meeting with German economists that it expects to hit its 2% inflation goal by 2025, the Financial Times said on Thursday.

· Gold Price Forecast: XAU/USD bears seize control as focus shifts to FOMC meeting

Gold extended the previous day's rejection slide from the very important 200-day SMA and witnessed aggressive selling for the second straight session on Thursday. The downward momentum dragged the XAU/USD to the lowest level since August 12 and was sponsored by a strong US dollar rally. Upbeat US Retail Sales data revived expectations for an early policy tightening by the Fed, which provided a strong boost to the greenback and weighed heavily on the dollar-denominated commodity.

Short-term technical outlook

From a technical perspective, the overnight slump below the $1,780 support was seen as a key trigger for bearish traders and might have already set the stage for additional losses. Some follow-through selling back below the $1,750 level will reaffirm the negative outlook and turn the XAU/USD vulnerable. The next relevant support is pegged near the $1,729-28 area before the commodity eventually drops back to challenge the $1,700 round figure.

On the flip side, any attempted recovery move might now be seen as a selling opportunity near the $1,772-74 region. This, in turn, should cap the upside for the precious metal near the $1,780 zone, which should now act as a strong barrier. A sustained move beyond might trigger a short-covering move and push the XAU/USD back above the key $1,800 mark, towards the $1,808-10 area (200-DMA).

· Silver was flat at $22.93 per ounce, after hitting its lowest in more than a month on Thursday.

· Platinum rose 0.6% to $938.88, while palladium dipped 0.1% to $2,032.31.

· China seen holding benchmark rate in Sept, some expect more liquidity support

· China applies to join Pacific trade pact to boost economic clout

China has filed an application to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the commerce ministry said, as the world’s second-biggest economy looks to bolster its clout in trade.

· China’s aggression led to the formation of a new trilateral security pact, says defense expert

An increasingly aggressive and assertive China contributed to the formation of a new trilateral security partnership among the U.S., the U.K. and Australia, a defense expert told CNBC.

· Japan's Kishida: need to watch if China can meet Pacific trade pact requirements

Former Japanese foreign minister Fumio Kishida, a contender to become next premier, said on Friday it was necessary to watch carefully if China, which seeks to join a Pacific free trade pact, is able to meet stringent requirements for its members.

China has filed an application to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), its commerce ministry said, as the world’s second-biggest economy looks to bolster its clout in trade.

· BOJ to maintain stimulus as supply disruption darkens export outlook

· BOJ tankan to show manufacturers' Q3 mood down slightly from Q2

Business confidence among Japan's large manufacturers likely slipped in the third quarter as the highly contagious COVID-19 Delta variant hit corporate and consumer activity, the central bank's closely watched Tankan survey is expected to show.

· Key economic policy stances of Japan's next PM candidates

· Taiwan calls for quick start to trade talks with EU

Taiwan’s government called on the European Union to quickly begin trade talks after the bloc pledged to seek a trade deal with the tech-heavyweight island, something Taipei has long angled for.

The EU included Taiwan on its list of trade partners for a potential bilateral investment agreement in 2015, the year before President Tsai Ing-wen first became Taiwan’s president, but has not held talks with Taiwan on the issue since then.

· Britain mulls easing COVID-19 travel rules for England

· UK retail sales fall unexpectedly in August - ONS

British retail sales volumes unexpectedly fell last month in what is now their longest streak of declines since current records began, though sales volumes still remain above pre-pandemic levels, official data showed on Friday.

Sales dropped 0.9% on the month in August versus economists' average forecasts in a Reuters poll for a rise of 0.5%, leading to their fourth consecutive monthly decline after previous months were revised lower, the Office for National Statistics said.

· Australian PM says he made clear to France possibility of scrapping submarine deal

Reference: CNBC, Reuters, FXStreet