PRECIOUS-Gold jumps 2% as dollar slips, but set for quarterly fall
Gold prices rose more than 2% on Thursday after the dollar fell on dismal U.S. weekly jobs numbers, but recent declines driven by expectations the Federal Reserve will soon start tapering its economic support kept bullion on track for a quarterly drop.
· Spot gold was up 1.7% at $1,755.56 per ounce by 1:32 p.m. EDT (1732 GMT), after rising 2.2% to a one-week high earlier in the session.
· U.S. gold futures settled up 2% at $1,757.
· The number of Americans filing new claims for unemployment benefits increased last week, data showed on Thursday, which could raise concerns the labour market was softening.
· “This is also leading to uncertainty about Fed tapering because they want a strong job market to announce a tapering,” independent consultant Robin Bhar said, adding that any delay could be positive for gold.
Gold is also “running into some renewed physical buying, with some investors looking to hedge against the economic uncertainty, rising inflation,” Bhar said.
· But heightened prospects for Fed tapering, widely expected to start in November, and chances of Treasury yields continuing to gain, are expected to heap more pressure on zero-yielding gold, said Han Tan, chief market analyst at Exinity.
· Reduced central bank stimulus and interest rate increases tend to push government bond yields higher, raising the opportunity cost of holding non-yielding gold.
· “A firmer U.S. dollar and higher yields are a toxic combination for gold,” Commerzbank said in a note.
“In the short term, the risk of a further price slide predominates, meaning that the $1,700 mark could already be reached soon,” the bank said. “As long as gold remains under pressure, silver is also likely to find it difficult to get out of the defensive.”
· Silver rose nearly 2.5% to $22.04 per ounce, but was set for a fourth consecutive monthly fall.
· Platinum gained 1.3% to $962.61, while palladium was up 2.4% at $1,901.41.
· U.S. GDP grows 6.7% in Q2 but markets more interested in Q3
However, some economists note that second quarter could represent the peak in growth as fiscal stimulus measures start to wind down. Many economists are looking past the latest GDP data and instead are focused on how a forth wave in COVID-19 infections during the summer have impacted activity. Growth estimates for the third quarter are below a 5% rate
Growth appears to have slowed in the third quarter because of the Delta variant as well as shortages of raw materials, which have hurt motor vehicle sales and constrained home building and purchases. Gross domestic product estimates for the third quarter are below a 5% rate.
· Initial claims for state unemployment benefits rose 11,000 to a seasonally adjusted 362,000 for the week ended Sept. 25. That was the third straight weekly increase.
· Fed's Evans: 'Let's be patient' on U.S. inflation
Chicago Federal Reserve Bank President Charles Evans on Thursday said he believes that the supply shocks that are pushing up on prices now will ease next year, and low interest rates will still be needed to bring U.S. inflation back durably to 2%.
· Fed's Bostic says hiring process for regional presidents "has worked well"
Atlanta Federal Reserve President Raphael Bostic said Thursday he welcomed a Board of Governors ethics review following the resignation of two of his colleagues this week, and felt that the Fed’s process for replacing them is adequate to ensure a diverse set of applicants is considered for the high-profile jobs.
· Fed's Powell pledges diversity focus in filling reserve bank openings
U.S. Federal Reserve Chair Jerome Powell on Thursday promised to redouble efforts to find “diverse candidates” to replace two high-profile officials who resigned this week after criticism of their securities trading, as the central bank tried to regroup from a blow to its typically staid, technocratic image.
· Biden tries to break the Democratic stalemate ahead of a key vote on his infrastructure bill
President Joe Biden spent his Thursday talking to key senators and Democratic leaders in Congress, trying to break an intra-party stalemate that threatens his entire domestic agenda.
Biden is under pressure to broker a deal between a group of progressives House members and two moderate Democrats in the Senate, each of whom are refusing to vote in favor of the others’ priorities until their own goals are met first
· U.S. default would cause 'irreparable' harm, Yellen warns again
Treasury Secretary Janet Yellen on Thursday agreed that any default on U.S. debt would cause irreparable harm as well as an ensuing financial crisis and recession.
Yellen, asked by a member of the House Financial Services Committee if the damage done by failure to meet the federal government's debt obligations would be "irreparable," answered: "Yes."
· S&P says U.S. risks severe downgrade but it expects debt ceiling fix
S&P Global Ratings on Thursday warned of “severe and extraordinary” consequences for financial markets if the United States defaults on its debt, although it added it expects the U.S. Congress will ultimately address the debt ceiling in a timely manner.
U.S. Treasury Secretary Janet Yellen has warned that the government could run out of cash by Oct. 18 if the debt ceiling is not raised or suspended, leading to its first-ever default. A two-year suspension of the debt ceiling expired in July and Democrats and Republicans in Congress remain at odds.
· German inflation accelerates at record pace in September
Consumer prices, harmonised to make them comparable with inflation data from other European Union countries, rose by 4.1% year-on-year compared with 3.4% in August, the Federal Statistics Office said.
That was the highest rate recorded since January 1997, when the EU-harmonised series began.
· Euro zone to discuss economic hit from soaring energy prices
The European Central Bank believes the more expensive gas, oil and electricity prices are only temporary and will ease in 2022 and many euro zone governments agree.
But ministers will discuss the issue separately and share best practice how to deal with the problem since they need to prepare 2022 budgets that will be heavily affected by energy costs.
· British petrol stations are still seeing unprecedented demand with more than a quarter of pumps still dry as the fuel crisis cut road traffic volumes to the lowest level since the COVID-19 lockdowns ended two months ago.
· Oil steadies after report China ready to buy more
Oil futures were little changed on Thursday as reports China was prepared to buy more oil and other energy supplies to meet growing demand offset price pressure from an unexpected rise in U.S. crude inventories and a strong dollar.
Brent futures for November delivery fell 12 cents, or 0.2%, to settle at $78.52 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 20 cents, or 0.3%, to settle at $75.03.
Earlier in the day prices at both benchmarks dropped over $1 a barrel.
· China Premier Li Keqiang said the world's biggest crude importer and No.2 consumer will ensure its energy, power supply and will keep economic operations within a reasonable range.
A possible dampener on oil prices has been the power crisis and housing market concerns in China, which have hit sentiment because any fallout for the world's second-biggest economy is likely to affect oil demand, analysts have said.
· Mexico's central bank hikes rates to 4.75% on inflation concerns
· Japan business mood improves as firms raise investment plans
· S.Korea Sept exports jump 16.7% y/y, slightly beating forecast
· N.Korea fires new anti-aircraft missile in latest test
North Korea fired a newly developed anti-aircraft missile on Thursday, state media KCNA reported on Friday, the latest in its recent series of weapons tests amid deadlocked denuclearisation talks with the United States.
Reference: Kitco, CNBC, Reuters, Worldometers
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