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Gold edged lower on Monday as a rise in U.S. Treasury yields dented its appeal, although a risk-off sentiment in wider financial markets limited losses for the metal.

·         Spot gold was down 0.1% at $1,765.14 per ounce by 1:35 p.m. EDT (1735 GMT), while U.S. gold futures settled down 0.2% at $1,765.70.

·         “If yields keep rising, the headwinds will remain significant for gold,” OANDA analyst Craig Erlam said.

“Unless markets start to price in bad news for the economy and stock markets, which may be a rational next step if policymakers insist on tightening even as the recovery remains sluggish and downside risks significant.”

·         Sentiment in wider financial markets remained weak as economic growth in China slowed, while a relentless surge in oil prices fuelled concerns about elevated inflation.

·         U.S. benchmark 10-year Treasury yields climbed as investors ramped up rate hike bets, while the dollar index held steady.

·         While gold is seen as an inflation hedge, it also contends with the greenback for safe-haven status. Reduced central bank stimulus and the prospect of interest rate hikes push government bond yields up, weighing on non-yielding bullion.

·         Investors increasingly expect the U.S. Federal Reserve to start tapering asset purchases after data showed a solid increase in U.S. consumer prices last month.

·         “In the event that the Fed hastens its policy tightening agenda, strengthening the dollar along the way, that should weaken the floor below bullion,” said Han Tan, chief market analyst at Exinity.

·         Other precious metals also dipped, with silver down 0.3% at $23.21 per ounce and platinum slipping 1.8% to $1,035.29. Palladium shed 3.3% to $2,005.07, its lowest in over a week.

 

·         10-year Treasury yield edges higher to start the week

The 10-year U.S. Treasury yield climbed higher to start the trading week, rising above 1.6% at one point in the morning.

 

·         Supply chain chaos is already hitting global growth.

Unfortunately, experts like Tim Uy of Moody’s Analytics say that supply chain problems “will get worse before they get better.”

“As the global economic recovery continues to gather steam, what is increasingly apparent is how it will be stymied by supply-chain disruptions that are now showing up at every corner,” Uy said in a report last Monday.

 

·         Chip shortages, Hurricane Ida weigh on U.S. factory output; demand remains strong

 

·         U.S. manufacturing output declines in September

Production at U.S. factories unexpectedly fell in September as motor vehicle output slumped amid an ongoing global shortage of semiconductors.

Manufacturing output dropped 0.7% last month, the Federal Reserve said on Monday. Data for August was revised down to show production falling 0.4% instead of rising 0.2% as previously reported. Economists polled by Reuters had forecast manufacturing production edging up 0.1%.

 

·         U.S. homebuilder confidence unexpectedly rises in October, survey shows

The National Association of Home Builders/Wells Fargo Housing Market Index rose 4 points - the most since November 2020 - to 80 this month. The reading topped the median estimate of economists in a Reuters poll of 76 and the increase pushed the index to a three-month high.

 

·         Tight U.S. job market triggers strikes for more pay

 

·         U.S. Democrats battle over climate change plans in $3.5 trillion bill

Negotiators of a U.S. bill to invest up to $3.5 trillion to expand social programs and attack climate change gave hints of progress on Monday, but some Democrats were resigned to the increasing likelihood that a proposal to reduce carbon emissions will be weakened or scrapped.

 

·         Yellen to extend extraordinary debt management measures through Dec 3

U.S. Treasury Secretary Janet Yellen told congressional leaders on Monday that she will extend extraordinary cash management measures to stay under the federal debt limit through Dec. 3 after a small increase in the borrowing cap was enacted last week.

Yellen said the extended “debt issuance suspension period” would mean that Treasury would continue its suspensions of investments in the Civil Service Retirement and Disability Fund and the Postal Service Retiree Health Benefits Fund. It will also extend a suspension of the sale of State and Local Government Series (SLGS) securities.

 

·         U.S. reviews sanctions policy, warns of threat from cryptocurrencies

  

·         India central bank says longer policy support is needed for sustained economic recovery

 

·         Defaults loom over more property developers as China reassures investors on Evergrande

  

·         Hedge funds take profits on bullish oil positions: Kemp

Hedge funds and other money managers sold the equivalent of 16 million barrels in the six most important petroleum-related futures and options contracts in the week to Oct. 12.

Investment managers had purchased a total of 194 million barrels over the previous seven weeks, according to records published by the U.S. Commodity Futures Trading Commission and ICE Futures Europe.

 

·         Gas crisis, labor shortages and supply chain chaos: Post-Brexit Britain faces a difficult winter

 

·         Lack of vaccination passport, testing threaten Japan's reopening

 

·         COVID-19 UPDATES:

 

Reference: CNBC, Reuters, Worldometers