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Gold jumps on softer dollar, inflation fears

Gold prices jumped on Wednesday, after the U.S. dollar weakened, as worries over rising inflation and supply chain issues boosted the safe-haven metal’s appeal.

·         Spot gold rose 0.9% to $1,785.25 per ounce by 14:00 ET (1800 GMT).

·         U.S. gold futures for December settled up 0.8% at $1,784.90 per ounce.

·         The dollar dipped, making gold more appealing to holders of foreign currencies.

·         “There is a global concern on what is going on with supply crunches and the lack of action from the Federal Reserve. It seems like the Fed is behind the ball on inflation,” said Bob Haberkorn, senior market strategist at RJO Futures.

“With supply chain and inflation issues, how will stocks continue to make new highs?” Haberkorn said, adding that “there is a flight to safety into gold that will go on for the next couple of months.”

·         StoneX analyst Rhona O’Connell said gold would see a change in range once it breaches the key $1,800 per ounce level, adding that the risk lies to the upside ahead of India’s Diwali festival and with steady demand in China.

·         Elsewhere, platinum rose 1% to $1,050.50 per ounce.

·         Palladium fell 1.2% to $2,072.71.

·         Silver rose 2.9% to $24.34 per ounce, having hit its highest in over one month.

 

·         Dollar dips as risk sentiment improves, bitcoin hits record high

The dollar dipped on Wednesday as risk sentiment improved and as investors focused on rising commodity prices and when global central banks are likely to begin hiking interest rates to fend off persistently high inflation.

The dollar index fell 0.24% to 93.57.

Market participants are pricing for the Fed to raise rates twice by the end of 2022.

 

·         U.S. yields extend rise after soft 20-year auction; curve steepens for 2nd day

Overnight, the U.S. 10-year yield climbed to a five-month peak of 1.673%, while that on the 5-year note matched a seven-month high of 1.193% hit on Monday.

·         Fed's Quarles: taper test is met, Fed not behind curve

Fed Governor Randal Quarles on Wednesday said that while it is time for the Fed to begin dialing down its bond-buying program, it would be premature to start raising interest rates in the face of high inflation that is likely to recede next year.

 

·         Fed report shows wage pressures amid 'modest to moderate' economic growth

U.S. employers reported significant increases in prices and wages even as economic growth decelerated to a “modest to moderate” pace in September and early October, the Federal Reserve said on Wednesday in its latest compendium of reports about the economy.

Employment increased, though labor growth was dampened by a low supply of workers, despite wage increases designed to attract new hires and keep existing employees, the report said.

 

·         Biden pushes infrastructure in Pennsylvania as Democrats try to seal deal

With his economic agenda hanging in the balance, President Joe Bidenon Wednesday visited the Pennsylvania city of his birth to push infrastructure and spending plans he said are needed to transform places like the former coal-mining town.

After touring a trolley museum in Scranton, Biden recounted life lessons he learned there and their impact on his run for president.

 

·         White House tells Democrats corporate tax hike unlikely -congressional source

The White House told Democratic lawmakers in a meeting on Wednesday that a proposed hike in corporate taxes is unlikely to make it into a final reconciliation bill, according to a congressional source familiar with the discussions.

President Joe Biden had proposed increasing the corporate tax rate from 21% to 28%, which would unwind the tax cuts enacted under Republican former President Donald Trump.

 

·         ECB hawk and German central bank chief Jens Weidmann quits, cites personal reasons

 

·         German tax take surges, ministry optimistic on growth, inflation

Tax take has risen dramatically this year, the German Finance Ministry said in its monthly report on Thursday, adding that there were signs that strong growth would resume next year, when inflationary pressures would also moderate.

Tax income rose 23.1% to 78.2 billion euros in September compared to last year, when the coronavirus pandemic was having a devastating impact on Europe’s largest economy. Over the first nine months of the year, the combined tax take of central and regional government was up 9.1% at 541 billion euros.

 

·         Germany's Jan-Aug oil imports fall 7.1%, bill rises 32.9%

German crude oil import volumes fell 7.1% in the first eight months of 2021 year-on-year as the COVID-19 pandemic and related lockdowns hit industry, but the bill was up by a third due to higher prices, official data showed on Wednesday.

Oil volumes in January through August fell to 51.9 million tonnes from 55.8 million in the same months of 2020, statistics from the BAFA foreign trade office showed.

 

·         U.S. to North Korea: it's time for sustained, substantive talks

 

·         N.Korea says U.S. overreacting over submarine missile test

 

·         COVID-19 UPDATES:

 

·         U.S. FDA clears Moderna, J&J COVID-19 boosters, backs use of different vaccine for boost

 

·         Melbourne readies to exit world's longest COVID-19 lockdowns

 

·         WHO warns of rise in Covid cases across Europe for third consecutive week as restrictions are eased

 

Reference: CNBC, Reuters, Worldometers