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Gold slips as dollar rally eclipses stagflation worries

Gold prices edged lower on Monday, weighed by a rallying dollar on bets the U.S. Federal Reserve would not put off stimulus tapering, although stagflation expectations limited losses in inflation-hedge bullion.

 

·         Spot gold was 0.1% lower at $1,754.54 per ounce, while U.S. gold futures settled down 0.1% at $1,755.7.

 

·         “The dollar is the main factor,” said Edward Moya, senior market analyst at brokerage OANDA.

 

While the dollar’s dominance could last until the Fed announces tapering, “the downside pressure on gold is starting to near its end, and we are approaching a peak where gold can finally stabilize and ultimately regain its historically longer bullish trend,” Moya added.

 

·         The dollar gained 0.3%, hurting gold’s appeal for those holding other currencies.

 

·         Bullion was trading near a high since Sept. 22, reached on Friday.

 

·         Support for gold “could be coming from some people thinking we have some stagflation at the moment, which is when gold is at its best, as inflation goes higher,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

 

·         Jitters over high inflation combined by stalling economic growth stunted global shares, amid rallying oil prices.

 

·         Spot silver fell 0.3% to $22.60 per ounce.

·         Palladium advanced 1.6% to $2,110.93 per ounce, with analysts attributing the bounce to short-covering after recent declines, while platinum was last down 1.8%, to $1,008.17, after hitting a 2-month peak earlier.

 

·         Palladium is seeing a technical rebound after prices hit support around $1,870, said ANZ analyst Soni Kumari.

“Fundamentals haven’t changed much with auto sector continuing to face challenges due to micro-chip shortage. Until we see auto production recovering meaningfully, which will depend on availability of semiconductors, we expect PGMs (platinum group metals) to remain volatile,” Kumari added. Platinum and palladium are used mainly in vehicle engines to reduce emissions.

 

·         Bitcoin rises to the highest since May, is now up 30% in October

Bitcoin extended its two-week rally Monday, climbing to the highest level since early May, according to Coin Metrics.

The cryptocurrency last traded more than 3% higher at $57,530.81 after hitting as high as $57,740.82.

 

·         Growth is biggest challenge for emerging economies - World Bank chief economist

 

·         JPMorgan’s Dimon says supply chain hiccups will soon ease, points to extraordinary consumer demand

Global supply chain hiccups caused by the coronavirus have put a damper on economic growth, but the problem will be a fleeting one, JPMorgan Chase CEO Jamie Dimon said Monday.

 

·         Jim Cramer says stagflation worries are overblown and investors shouldn’t panic

CNBC’s Jim Cramer said Monday he believes stock market investors should not overreact about stagflation just yet, suggesting Wall Street’s growing worries may be overblown.

 

·         U.S. earnings seen strong, but supply chains and costs worry investors

 

·         IMF boss Georgieva risks losing her job over China bias claims.

Kristalina Georgieva, managing director of the International Monetary Fund, is under pressure after allegations that she told staff at the World Bank to amend a rankings to China’s benefit.

Georgieva denies the claims. But the scandal is forming a shadow over the IMF and World Bank’s annual meetings, which take place this week from Washington, D.C.

CNBC takes a look at the claims, and what the IMF is doing about it.

 

·         IMF board to back Managing Director Georgieva - sources

The International Monetary Fund's executive board will issue a statement of support for Managing Director Kristalina Georgieva after a thorough review of allegations that she pressured World Bank staff to alter data to favor China, sources familiar with the decision said.

 

·         China’s military assertiveness over Taiwan will likely persist, says defense analyst

China’s military assertiveness over Taiwan will likely continue in the next 12 months as tensions between the two sides intensify, a defense analyst said Monday.

“I think a lot of this boils down to China wants to get the attention of the United States,” Derek Grossman, senior defense analyst at think tank, Rand Corporation, told CNBC’s “Squawk Box Asia.”

 

·         N.Korean leader says U.S., S.Korea threaten peace with military buildup

North Korean leader Kim Jong Un said his country's weapons development is necessary in the face of hostile policies from the United States and a military buildup in South Korea that is destabilising the peninsula, state media said on Tuesday.

Pyongyang was only increasing its military in self-defence and not to start a war, Kim said in a speech at the Defence Development Exhibition, according to a report by state news agency KCNA.

 

·         COVID-19 UPDATES:

 

·         U.S. moves closer to clearing Moderna and J&J Covid booster shots this week

 

·         Moderna has no plans to share its Covid vaccine recipe

 

·         Merck seeks first U.S. authorization for COVID-19 pill

 

·         Sydney COVID-19 cases ease further as focus shifts to reviving economy

 

Reference: CNBC, Reuters, Worldometers