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·         Spot gold declined 0.9% to $1,751.56 per ounce by 2:11 a.m. ET and U.S. gold futures settled 1.6% lower at $1,749.80.

 

·         “We have seen yields rise, especially real rates, and that’s dragging gold lower,” said TD Securities’ commodity strategist Daniel Ghali.

 

·         The U.S. central bank said on Wednesday it will likely begin reducing its bond purchases as soon as November and signaled interest rate increases may follow more quickly than expected.

 

·         A Fed rate hike would increase the opportunity cost of holding gold, which pays no interest.

 

·         The Fed’s comments outweighed any likely support from an unexpected rise in U.S. weekly jobless claims, and the path of least resistance now for gold is down, said Bob Haberkorn, senior market strategist at RJO Futures.

 

·         Also pressuring safe-haven assets, global equities advanced, helped by fading concerns over China’s cash-strapped property developer Evergrande.

 

·         Bullion found little support from a retreat in the dollar, which usually buoys demand for gold since it makes the metal cheaper for those holding other currencies and as it competes with the precious metal as a safe-haven asset.

 

·         “Gold positioning is actually fairly clean so we don’t expect this weakness to morph into a rout,” TD Securities’ Ghali said.

 

·         “On the contrary, gold is going to remain range bound in the same range that has prevailed over the last few weeks and months.”

·         Platinum edged 0.1% lower to $996.30 per ounce, while palladium shed 1.5% at $1,992.98, after a two sessions of gains.

·         Silver fell 0.2% to $22.62.

 

·         Dollar slumps as risk appetite rebounds

The dollar fell across the board on Thursday as improved risk sentiment in global financial markets wiped out its gains in the previous session after the U.S. Federal Reserve flagged plans to dial back its stimulus this year.

Worries about Evergrande’s payment obligations and what systemic risks to China’s financial system the property giant’s difficulties pose have weighed on global financial risk sentiment in recent sessions.

The U.S. Dollar Currency Index, which measures the greenback against a basket of six rivals, was 0.5% lower at 93.037. The index, which had risen 0.25% on Wednesday, was on pace for its biggest daily percentage drop in a month but remains close to the near 10-month high touched in late August.

 

10-year Treasury yield climbs higher as investors focus on Fed’s eventual taper

The yield on the benchmark 10-year Treasury note jumped 10 basis to 1.434% by 4:20 p.m., rising above 1.4% for the first time since July. The yield on the 30-year Treasury bond rose 9 basis points to 1.944%. Yields move inversely to prices and one basis point is 0.01%.

 

The second straight weekly increase in jobless claims reported by the Labor Department on Thursday puzzled economists. Some pointed a finger at the wildfires in California, while others blamed Hurricane Ida, which devastated U.S. offshore energy production in late August. There was little conviction that ongoing COVID-19 infections, driven by the highly contagious Delta variant of the coronavirus, were a factor.

Initial claims for state unemployment benefits increased 16,000 to a seasonally adjusted 351,000 for the week ended Sept. 18. Economists polled by Reuters had forecast 320,000 applications for the latest week.

Unadjusted claims in California jumped 24,221 while Virginia reported a rise of 12,879. There were also notable increases in Oregon, Ohio and Kentucky. Claims in Louisiana fell and have been above their pre-hurricane trend in recent weeks.

 

·         BoE sees growing case for rate rise as inflation to stay higher for longer

The Bank of England said the case for higher interest rates "appeared to have strengthened" on Thursday after it nudged up its forecast for inflation at the end of the year to over 4%, more than twice its target rate.

The BoE said it expected the overshoot to be temporary, but two policymakers called for an immediate halt to the British central bank's 895 billion pound ($1.23 trillion) bond purchase programme, which is due to run until year-end.

 

·         Chinese Officials Warn of Fallout from Potential Evergrande Default

Chinese officials are bracing for a potential financial crisis as giant real estate conglomerate China Evergrande Group appears to be unable to make good on bond payments due on Thursday.

According to the Wall Street Journal, the central government has instructed local officials across the country to begin “getting ready for the possible storm,” if the firm is unable to come to an agreement with creditors. Evergrande is currently carrying a staggering load of more than $300 billion in debts and other liabilities.

 

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