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Gold firms as dollar slips, poised for weekly gain

·             Gold inched higher on Friday as a weaker dollar and worries about rising inflation and risks to growth countered bets for looming interest rate hikes, keeping bullion on course for a small weekly gain.

·             Spot gold was up 0.1% at $1,759.13 per ounce.

·             U.S. gold futures settled up 0.1% at $1,758.4.

·             Gold was on track for its first weekly uptick since Sept. 3, rising about 0.5% so far, as a retreat in the dollar on Thursday helped it bounce about 2%.

·             Dips in the dollar and lower bond yields are supporting gold, while investors reposition for the fourth quarter, said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

·             Helping gold’s appeal, European and Asian stocks fell on worries about inflation and possible slowdown in growth.

·             “Anyone trying to convince market participants that inflation is not here, that’s a fool’s game,” Saxo Bank analyst Ole Hansen said, adding that soaring energy prices due to a crunch in China and Europe will likely hit growth and earnings and lead to a volatile October, which will support gold.

·             Prospects that the U.S. Fed may still wind down economic support this year pressured gold, some analysts said, since reduced stimulus and higher interest rates tend to push government bond yields up, raising gold’s opportunity cost.

·             Silver added 1.5% to $22.53 per ounce, and was up 0.5% for the week.

·             Platinum rose 1.1% to $974.41 per ounce, and palladium rose 0.8% to $1,924.18, but both were set to fall for the week.

 

·             Apart from the semiconductor tightness hurting the automobile industry, amid low liquidity, palladium’s declines are also driven by general weakness “across the industrial metals coming out of China,” Hansen added.

 

·             SPDR GOLD HOLDINGS:
Sell More Nearly 3.5 Tonnes on 1 Oct.

·         U.S. dollar slides for 2nd day, but outlook stays upbeat

The dollar fell for a second straight session on Friday, tracking declines in U.S. Treasury yields, as investors booked profits after recent sharp gains, though the decline was viewed as temporary.

U.S. 10-year Treasury yields were last at 1.484%, down nearly six basis points.

For the week, the dollar index posted its largest percentage gain since late August, as investors looked to the Federal Reserve’s reduction of asset purchases in November and a possible rate hike late next year.

Cautious market sentiment due to COVID-19 concerns, wobbles in China’s growth and a Washington gridlock ahead of a looming deadline to lift the U.S. government’s borrowing limit has lent support to the dollar, seen as a safe-haven asset.

In afternoon trading, the dollar index slid 0.3% to 94.046, having gained 0.8% this week, the largest weekly rise since late August. Friday’s batch of U.S. data was mixed, adding to dollar weakness ahead of the weekend.

U.S. consumer spending increased more than expected in August, posting a 0.8% rise, but consumption was weaker than initially thought in July, dipping 0.1% instead of gaining 0.3%.

Inflation remained elevated, but not by much. Core inflation as measured by the personal consumption expenditures (PCE) price index, excluding the volatile food and energy components, was up 0.3% in August, unchanged from previous month.

In manufacturing, data was more upbeat. The Institute for Supply Management (ISM) said its index of national factory activity increased to a reading of 61.1 last month from 59.9 in August.

In other currencies, the euro rose 0.1% to $1.1595, falling about 1.1% for the week, its biggest percentage fall since mid-June.

The yen bounced back against the dollar from a 19-month low overnight, with the greenback last down 0.2% at 111.105 yen. Commodity currencies rallied against the U.S. dollar on Friday as well.

Sterling was last up 0.6% though at $1.3552, just above a 9-month low at $1.3516.

 

·       Bitcoin jumps to start October and analysts see strong fourth-quarter ahead for crypto

Cryptocurrencies got off to a rough start for the third quarter but ended with solid gains, overcoming a raft of negative headlines on the space.

And prices were hopping on the first day of October as investors bet on a fourth-quarter run. Bitcoin popped about 8% to above $47,000 on Friday, according to Coin Metrics. Ethereum jumped 9%.

 ·       Biden administration considering regulating stablecoin issuers as banks – WSJ

 

·         Fed's Mester repeats first rate hike could come at the end of 2022

The Federal Reserve's conditions for raising interest rates could be met by the end of 2022, Cleveland Fed Bank President Loretta Mester said on Friday, adding that she expects inflation to come back down to the central bank's target next year.

Mester said she expects inflation will start to come back down once supply side and pent-up demand factors ease, forecasting inflation will be above 2% in 2022 and 2023.

 

·         Fed's Harker says he worries inflation won't be as transient as expected

While he does not expect inflation to spiral out of control, Philadelphia Federal Reserve Bank President Patrick Harker said he is worried inflationary pressures may not be as transient as expected.

 

EXCLUSIVE Fed's Harker says economy close to achieving inflation goal for rate hikes

·         Fed vice chair traded into stocks on eve of Powell pandemic statement- Bloomberg

U.S. Federal Reserve Vice Chair Richard Clarida traded between $1 million and $5 million out of a bond fund into stock funds one day before Chair Jerome Powell issued a statement indicating potential policy action due to the worsening of the COVID-19 pandemic, Bloomberg News reported on Friday.

Clarida's trades were described in his 2020 financial disclosures, showing the shifting of funds out of a Pimco bond fund on Feb. 27, 2020, and buying the Pimco StocksPlus Fund and the iShares MSCI USA Min Vol Factor exchange-traded fund in similar dollar ranges, on the same day, the report said.

 

·          Biden’s top trade advisor will say China isn’t complying with phase 1 deal reached under Trump, according to sources

The announcement will represent some of the the Biden administration’s most forceful pushback against China. Tai will deliver remarks Monday on her review of China trade policy in Washington.

 

·         U.S. trade deal is not the 'be all and end all' -UK's Truss

A deal with the United States is not the "be all and end all" of trade agreements, British Foreign Secretary Liz Truss said on Sunday.

 

·         Global money managers flock to China stocks despite strains

Global money managers have pumped a combined $13.3 billion into Chinese equities funds over the past five weeks, data shows, despite the concerns over property giant China Evergrande’s future and rising regulatory pressure from Beijing.

 

·         Factories struggling as supply constraints hit, costs rise

Global manufacturing activity took a big hit from supply chain bottlenecks and escalating costs, exacerbated by pandemic-induced factory shutdowns in Asia and signs of slowing Chinese growth, surveys showed on Friday.

While countries where outbreaks of the Delta coronavirus variant receded saw an improvement in activity, growth shrank in some as chip shortages and supply disruptions impacted those still struggling to shake off the hit from COVID-19.

 

·         Semiconductor chip shortage could extend through 2022, Marvell CEO says

The semiconductor chip shortage that is hamstringing the production of products ranging from cars and computers to appliances and toothbrushes will extend into 2022 and potentially beyond that, the CEO of semiconductor company Marvell Technology said.

 

·         North Korea accuses U.N. of double standards over missile tests, warns of consequence

 

·         North Korea to reopen inter-Korean hotlines on Monday

 

·         European gas prices hit all-time highs as Russian flows slump

European gas prices surged to all-time highs on Friday as Russia kept a tight lid on supply, signalling further price pressures on European consumers heading into the winter heating season.

Russian gas supplies via the Yamal-Europe pipeline fell on Friday by almost 77% from Thursday, according to data from grid operator Gascade, as Kremlin-controlled Gazprom (GAZP.MM) booked only a third of its available capacity for October.

 

·         COVID-19 UPDATES:

 

·         Merck says its new Covid pill reduces the risk of hospitalization, death by half  for some patients

  

Reference: Bloomberg, CNBC, Reuters, Worldometers