· Gold prices were subdued on Tuesday as cautious investors braced for U.S. Federal Reserve’s guidance on tapering its assets and interest rate hikes, while risk-off sentiment stoked by China Evergrande’s debt crisis limited losses in the safe-haven metal.
· Spot gold inched 0.2% lower to $1,760.80 per ounce by 0645 GMT, while U.S. gold futures were flat at $1,762.10.
· “In the longer term, they’re (gold prices) still skewed to the downside because we’re going to continue to see the Fed wanting to push towards normalizing monetary policy, which typically is not a good environment for gold,” IG Market analyst Kyle Rodda said.
· The Fed is likely to provide an outlook on how soon and how often they think the economy will need interest rate rises over the next three years at their policy meeting on Wednesday.
· Gold prices recovered on Monday from a more than one-month low of $1,741.86 as concerns over the fallout from property developer Evergrande’s solvency issues spooked stock markets worldwide and drove investors to safe-haven assets.
· “Depending on how the Evergrande situation plays out with markets, gold could continue finding safe-haven buyers, or buying interest could evaporate … particularly if the China government soothes nerves when it returns to work tomorrow,” Jeffrey Halley, a senior market analyst for Asia Pacific at OANDA, said in a note.
· On the technicals front, spot gold may retest a support at $1,744, a break below could cause a fall into the $1,724-$1,736 range, according to Reuters technical analyst Wang Tao.
· Gold Price Forecast: XAU/USD's technical setup to outweigh Evergrande risks
Gold’s recovery faced stiff resistance just below the $1770 level. XAU/USD set to fall? Technicals are set to outweigh Evergrande risks, FXStreet’s Dhwani Mehta briefs.
“A minor improvement in the risk sentiment amid stabilizing Hong Kong equities and conciliatory comments from China Evergrande Chief caps gold’s recovery gains.”
“Fed’s tapering plan appears intact, despite the latest China worries. The risk rebound could pick up pace, extending the rebound in the Treasury yields while lifting the demand for the greenback once again. In such a case, XAU/USD will likely resume its downside.”
“The 21-Daily Moving Average (DMA) is set to pierce the 50-DMA from above. If such a move materializes, then it would confirm a bear cross, opening floors for a fresh downswing towards the multi-week troughs near $1740. The $1700 psychological magnate will be on the sellers’ radars should the monthly lows give way.”
“A sustained move above the $1767 supply zone is needed to unleash the recovery gains towards the 21 and 50-DMA confluence near $1795. Gold bulls will then aim for the horizontal 200-DMA at $1807, as the next upside target.”
· Gold Price Forecast: XAU/USD remains pressured below $1,770 amid yields rebound, pre-Fed anxiety
Gold prices lack the enthusiasm to enjoy a slight pullback in the greenback on Tuesday. The losses in the US dollar are compensated by the higher US benchmark 10-year Treasury yields. Investors remained cautious ahead of the US Fed’s two-day policy meeting starting later in the day and concluding on Wednesday.
The Fed has given signals on the beginning of tapering but remained tight-lipped on the timing of the rate hike. The precious metal reversed some losses from Monday owing to China’s Evergrnade debt crisis and its ripple effect on the global market. Furthermore, improved economic outlook and prospects of major central banks tightening are acting as headwinds for gold prices. On the lower side, the precious metal is being guarded by persisting coronavirus risks, uneven global economic recovery and China’s regulatory crackdown measures.
Technical analysis
Gold’s rebound from early August levels enables it to regain past July lows, suggesting short-term recovery towards a confluence of 10-DMA and a monthly horizontal line near $1,780.
However, bearish MACD signals hint at the seller’s dominance, which if ignored could direct the gold buyers towards the $1,800 threshold and the double tops surrounding $1,834 afterward.
In a case where the gold bulls manage to cross the $1,834 hurdle, they can aim for June’s top close to $1,917.
Meanwhile, pullback moves remain less worrisome unless staying beyond July’s low of $1,750.
Following that, a horizontal area from August 10, near $1,740-35, will precede the $1,700 round figure to lure the bears.
· Silver edged 0.2% higher to $22.28 per ounce.
· Palladium climbed 1.2% to $1,908.71, while platinum gained 0.8% to $918.00.
· Copper prices hover near 1-month low on Evergrande debt crisis
Prices of copper, used widely in the power and construction industries, were trading near a one-month low on Tuesday as a debt crisis at China developer Evergrande Group spurred a sell-off across markets and stoked worries over global demand.
Three-month copper on the London Metal Exchange edged up 0.3% to $9,063 a tonne by 0337 GMT, but was hovering near its lowest level since Aug. 20 hit in the previous session of $8,975 a tonne. The contract lost 4.8% so far this month.
· UK public borrowing overshoots forecasts in August
British public sector net borrowing, excluding state-controlled banks, totalled 20.5 billion pounds ($28.02 billion) in August, the Office for National Statistics said on Tuesday.
· ECB’s de Guindos: Inflation could peak around November at around 3.4-3.5%
“Q3 growth will be strong.”
“Have not seen indication that wages are on the rise.”
“Need to be vigilant to upside surprise on inflation.”
“Great majority of inflation rise is technical, temporary.”
· Germany’s election race is too close to call as Socialists’ poll lead narrows
With just a handful of days until Germans vote in the federal election on Sunday, the latest poll shows the gap narrowing between the top two contenders.
While Germany’s Social Democratic Party (SPD) remains in front, a new poll by Insa for the German newspaper Bild has found the gap is narrowing.
· France urges Britain to uphold Brexit deals, restore trust
· RBNZ comments dampen market expectations of a big rate hike
New Zealand's central bank dampened expectations of a big interest rate hike when it meets next month, with comments on Tuesday that indicated it may take a more cautious approach.
The Reserve Bank of New Zealand (RBNZ) Assistant Governor Christian Hawkesby said in a speech that amid uncertainty, when the risks are evenly balanced, "central banks globally tend to follow a smoothed path and keep their policy rate unchanged or move in 25 basis point increments."
The New Zealand dollar last traded 0.2% weaker at $0.7015, having touched a three-week low of $0.7000 earlier in the session in response to the RBNZ comments. One-year swap rates dropped to 1.07% from 1.15%.
The RBNZ is meeting on Oct. 6 to review its monetary policy settings. The bank held off raising the official cash rate (OCR) in August, despite inflationary pressures rising, after a new outbreak of the Delta variant of the coronavirus.
· Canada's Trudeau wins another minority in election, claims 'clear mandate'
· Czech central banker Holub 'quite likely' to support 50 bp hike in Sept, open to more
Czech central banker Tomas Holub said that he would likely support a 50 basis point rate increase at the next policy meeting on Sept. 30, adding to signals that the central bank could deliver its biggest hike since 1997 next week.
· The first test for Evergrande’s debt crisis comes this week
Evergrande is due to pay out interest worth $83 million on a 5-year, U.S.-dollar denominated bond, with an initial issue size of around $2 billion. Another interest payment on a 7-year dollar bond is due next Wednesday, on Sept. 29.
Analysts and market watchers largely expect that Evergrande to miss the interest payment on Thursday.
If these initial defaults happen, institutional and other foreign investors will likely be more affected compared to domestic investors in China, analysts say.
· Japanese finance minister says meeting budget target may take more time
· Pfizer/BioNTech say data show COVID-19 vaccine safe and protective in kids
· Thailand to try alternative COVID-19 vaccination method to stretch supplies
Doctors in Thailand have been given the go-ahead to start giving COVID-19 booster shots under the skin, rather than injecting them into muscles, officials said on Monday, in an effort to strengthen immunity and stretch vaccine supplies.
Reference: Reuters, CNBC, FXStreet
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