Gold prices rose about 1% on Monday, as a retreat in U.S. bond yields and persisting worries about inflation lifted the safe-haven asset ahead of major central bank meetings this week.
· Spot gold gained 0.8% to $1,805.90 per ounce.
· U.S. gold futures for December delivery settled up 0.6% at $1,806.80 per ounce.
· “The main reason for this rally is that yields backed off a little bit ... but prices are still kind of range bound,” said Daniel Pavilonis, senior market strategist at RJO Futures.
“We have a lot going on this week in terms of earnings and data points. There maybe a situation where inflation is going to impact earnings and the Federal Reserve is realizing that and will thus be forced to taper.”
· U.S. benchmark 10-year Treasury yields fell to a session low of 1.6200%, reducing the opportunity cost of holding non-interest bearing bullion.
· Gold eased off its September highs on Friday after U.S. Fed Chair Jerome Powell reiterated his view that high inflation would likely abate next year and said the U.S. central bank should begin reducing its asset purchases soon.
· “Powell’s recent comments may have amplified concerns of inflation sticking around for longer, which is apparently further eroding support for team ‘transitory’ and fuelling a stronger bid for gold as an inflation hedge,” said Han Tan, chief market analyst at Exinity.
· Investor focus now shifts to the Bank of Japan and European Central Bank meetings due on Thursday, while the next U.S. Fed meet is due on Nov. 2-3.
· While gold is often considered an inflation hedge, reduced stimulus and interest rate hikes push government bond yields up, raising the opportunity cost of holding bullion.
· Elsewhere, silver rose 0.7% to $24.48 per ounce.
· Platinum rose 1.5% to $1,056.61 per ounce. Palladium rose 1.3% to $2,048.77 per ounce.
· Dollar steadies after bounce off of one-month low
The dollar steadied on Monday afternoon after bouncing off a one-month low as traders weighed the prospects of higher interest rates for different currencies and considered how coming economic data and central bank comments could impact their positions.
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 93.845 after a recent jump from below 93.6.
The euro lost 0.3% to $1.1613.
· 10-year Treasury yield dips to start the week
U.S. Treasury yields moved lower in volatile trading on Monday to start the final week of October
The yield on the benchmark 10-year Treasury note fell nearly 2 basis points to 1.636%. The yield traded as high as 1.673% earlier in the session. The yield on the 30-year Treasury bond slipped less than 1 basis point to trade at 2.086%. Yields move inversely to prices and 1 basis point is equal to 0.01%.
· The U.S. Federal Reserve meets next week.
· Fed to hold conferences in November focused on diversity and inclusion
The Federal Reserve will host a series of diversity and inclusion conferences in November focusing on underrepresented groups and their experiences in the economics profession, central banking, finance and the economy overall, the U.S. central bank announced on Monday.
The first conference, scheduled for Nov. 8, will focus on how gender can influence a person's economic and financial outcomes.
The second conference, held on Nov. 9, will showcase research on diversity and inclusion in economics, finance, and central banking and includes a panel discussion among current and former central bank officials. That event, hosted in partnership with the Bank of Canada, the Bank of England, and the European Central Bank, will include a panel with current and former central bank officials.
Fed Chair Jerome Powell will deliver opening remarks at both events, the central bank said. The announcement comes as there is uncertainty over whether Powell will nominated to continue his run as Fed chair after his term ends in February.
· Biden hopeful Democrats can reach spending deal before he attends climate summit
President Joe Biden held out hope on Monday for an agreement on his major spending plans before he attends a climate summit in Scotland, while the White House said Democratic negotiators were closing in on a deal.
· U.S. business borrowing for equipment rises 6% in September - ELFA
U.S. companies increased their borrowings for capital investments in September by 6% compared with a year earlier, the Equipment Leasing and Finance Association (ELFA) said on Monday.
The companies signed up for $9.2 billion in new loans, leases and lines of credit last month, up from $8.7 billion a year earlier. Borrowings rose 8% from August.
· Economists expect shipping problems to linger well into 2022
· South Korea's Q3 GDP grows at slower pace, misses forecast
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