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Gold prices ease as Fed rate hike signal dents appeal

 

·         Gold prices fell on Thursday as an interest rate hike signal from the U.S. Federal Reserve dented the appeal of the non-yielding bullion, although a retreat in the dollar limited the metal’s decline.

 

·         Spot gold was down about 0.3% at $1,763.50 per ounce by 0644 GMT, while U.S. gold futures slipped 0.8% to $1,764.20.

 

·         New projections from the Fed’s policy meeting showed half of the officials were ready to raise interest rates next year in response to heating inflation.

 

·         “Everyone is going to be focused on how persistent these inflation pressures are and whether the Fed needs to be hastier in hiking the Fed funds rate in response... Once we start talking about rate hikes that’s going to be really bad for gold prices,” IG Market analyst Kyle Rodda said.

 

·         Gold is often considered a hedge against higher inflation, but a Fed rate hike would increase the opportunity cost of holding gold, which pays no interest.

 

·         Fed Chairman Jerome Powell said the central bank could begin withdrawing its asset purchases after its November policy meeting as long as U.S. job growth through September is “reasonably strong.”

 

·         Providing some respite to gold, the dollar eased 0.2% after hitting a one-month high earlier in the session.

 

·         Gold could find support at these levels with developments around China Evergrande and an upcoming debt ceiling debate in the United States potentially causing some market volatility, said Harshal Barot, a senior research consultant for South Asia at Metals Focus.

 

·         On the technicals front, spot gold may revisit its Sept. 20 low of $1,741.86, as the drop on Wednesday confirmed completion of the bounce from this level, according to Reuters technical analyst Wang Tao.

 

·         Silver fell 0.4% to $22.59 per ounce. Palladium rose 0.5% to $2,033.68, while platinum edged 0.3% higher to $999.77.

 

·         Intel, Apple, carmakers to attend White House meeting on chip shortage

Intel Corp Chief Executive Pat Gelsinger plans to attend a virtual White House meeting on the global chip shortage on Thursday, along with representatives from companies including Apple, Microsoft, Samsung Electronics, GM, Ford and Stellantis, people familiar with the matter said.

 

·         Bank of England expected to keep rates steady as inflation risks mount

Britain’s central bank looks set to keep interest rates steady later on Thursday as it approaches the end-point of its 895 billion pound ($1.22 trillion) asset purchase programme and casts a wary eye over surging inflation pressures.

Investors will be keen to see if more Monetary Policy Committee (MPC) members join external member Michael Saunders who voted in August to halt the current year-long programme of asset purchases, which the Bank of England committed to last November.

The BoE is ahead of other major central banks in planning to stop quantitative easing by the end of this year, and half its policymakers judged in August that some preconditions for an interest rate rise had already been met.

 

·         China Pumps $17 Billion Into System Amid Evergrande Concerns

China’s central bank net-injected the most short-term liquidity in eight months into the financial system, with markets roiled by concerns over China Evergrande Group’s debt crisis.

The People’s Bank of China pumped in 110 billion yuan ($17 billion) of cash with seven- and 14-day reverse repurchase agreements. That was the largest addition through open-market operations since late January, when a funding squeeze sent interbank rates soaring. Prior to Thursday, the PBOC had injected liquidity for three straight sessions, stoking bets that Beijing hopes to soothe market nerves over Evergrande.

 

·         U.S. business optimism in China rebounds to pre-trade war levels -survey

U.S. companies' optimism about business conditions in China has recovered to hit three-year highs even though the firms have reservations about Beijing's COVID-19 policy, an annual survey showed on Thursday.

 

·         Evergrande seeks to reassure retail investors as key debt deadline looms

China Evergrande Group (3333.HK) will make it a top priority to help retail investors redeem their investment products sold by the indebted property giant, its chairman said, as uncertainty looms over interest payment due for a dollar bond on Thursday.

Hui Ka Yan's statement came after the developer said on Wednesday it had "resolved" a coupon payment on an onshore bond, pushing the company's stock price to its biggest single-day percentage rise since its listing in 2009.

 

·         Indonesia Finance Minister warns of ripple effect from China's Evergrande debt woes

Indonesian authorities are monitoring the financial market situation in China, finance minister Sri Mulyani Indrawati said on Thursday, and warned that property firm China Evergrande’s debt woes could affect the world’s economy.

 

·         Taiwan applies to join Pacific trade pact week after China

Taiwan has formally applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the government said on Wednesday, less than a week after China said it too had submitted an application.

 

·         J&J says second shot boosts protection for moderate-severe COVID-19 to 94%

Johnson & Johnson (JNJ.N) said Tuesday a second shot of its COVID-19 vaccine given about two months after the first increased its effectiveness to 94% in the United States against moderate to severe forms of the disease.

 

Reference: Reuters, CNBC, Finance.yahoo