Gold prices edged higher in seesaw trading on Wednesday, buoyed by a fall in U.S. bond yields and a softer dollar, although strong risk appetite in equity markets kept bullion’s gains in check.
· Spot gold was up 0.2% at $1,796.55 per ounce by 01:47 p.m. ET (1747 GMT), after falling as much as 0.6% earlier in the session.
· U.S. gold futures settled 0.3% higher at $1,798.80 per ounce.
· SPDR GOLD HOLDINGS BUY MORE 3.2 TONNES TO 983.01 TONNES
· “We are in a consolidation period for gold, but I think that eventually the policy tightening and inflation concerns should be positive for the metal,” said Edward Moya, senior market analyst at brokerage OANDA.
“Earnings have been fairly impressive, and that is surprising a lot of people... U.S. tech stocks are a favourite place to go for many investors, which is dampening the demand for a safe haven right now.”
· Appetite for riskier assets remained strong after strong quarterly reports from Google-owner Alphabet Inc and Microsoft Corp lifted the Nasdaq.
· Helping gold, the dollar index dipped 0.2% against its rivals. Benchmark 10-year U.S. Treasury yields slipped below 1.6% to a near two-week low, decreasing the opportunity cost of holding non-yielding bullion.
· Gold Demand Slips as Investors Shun Gold ETFs
Gold demand fell in the third quarter as investors sold their holdings in gold-backed exchange-traded funds as the precious metal's price was kept in check by a rising dollar and higher bond yields, according to the World Gold Council.
Total gold demand stood at 831 metric tons in the third quarter. That was 7% lower year-on-year, and 13% lower than in the previous quarter, the WGC said in its quarterly Gold Demand Trends report.
Overall gold demand fell due to waning demand from investors for gold-backed ETFs, a trend which counteracted an increase in demand for gold jewelry, central bank buying, and investor demand for physical gold bars and coins, the WGC said.
Gold ETFs swung from positive, but already waning inflows in the second quarter, to net outflows of 26.7 tons in the third quarter, the WGC's data shows.
· Investors are now awaiting Thursday’s European Central Bank meeting and the U.S. Federal Open Market Committee policy meeting on Nov. 3 for more clues on the tapering timeline.
· The ECB is expected to keep policy unchanged and leave a decision on its pandemic emergency bond purchase programme to December.
· While gold is often considered an inflation hedge, reduced economic stimulus and higher interest rates push government bond yields up, raising the opportunity cost of holding bullion.
· Elsewhere, silver eased 0.1% to $24.10 per ounce.
· StoneX analyst Rhona O’Connell said interest in silver is building in the professional market and that bodes well for gold.
· Platinum slipped 1.4% to $1,013.50 per ounce. Palladium tumbled 2.6% to $1,959.17.
· U.S. business spending on equipment strong; auto shortages sink exports
New orders for U.S.-made capital goods increased to a record high in September and shipments surged, pointing to strong business spending on equipment, though stretched supply chains likely hampered overall economic growth in the third quarter.
· In global supply chain with no quick fix, companies are paying to ship air
· U.S. holiday sales could hit record levels of over $800 bln - NRF
U.S. holiday sales could rise over 10% this year, a trade body said on Wednesday, as major consumer goods makers and retailers work to prevent supply chain disruptions from leaving shelves empty of in-demand toys and games.
The National Retail Federation (NRF) forecast sales to increase between 8.5% and 10.5%, to between $843.4 billion and $859 billion, during November and December, compared with a previous high of $777.3 billion last year. The numbers exclude automobile dealers, gasoline stations and restaurants.
· The picture won’t be pretty for third-quarter economic growth, but it should get better
· U.S. 2-year yield soars to 19-month peak, curve flattens across the board
The U.S. 2-year Treasury yield rose to a 19-month high on Wednesday, occasioning the sharpest flattening of one yield curve yardstick since the pandemic started amid heightened anticipation of a Federal Reserve interest rate rise next year.
U.S. 10-year yields dropped to a two-week low of 1.52% and were last at 1.5378%. The widely watched spread between the 2- and 10-year yields fell to 103.7 basis points, from 116.4, the biggest point contraction since March 27, 2020, and the flattest since late August.
In the run-up to the Fed's policy meeting next week, market focus has moved beyond pricing the central bank's likely taper of asset purchases and onto the timing of the first rate rise since December 2018.
· Currency markets steady after hawkish Bank of Canada comments
The moves left the U.S. dollar index down 0.1% to 93.8240 after the dollar weakened against the Canadian dollar, euro and Japanese yen.
· The Bank of Canada comments could be the first trigger for new assessments of how interest rates will change and impact currencies as central bankers try to support the pandemic recovery without unleashing sustained inflation.
· Australia's central bank declines to buy target bond even as yield spikes
Australia’s central bank on Thursday made no offer to buy a government bond that is the linchpin of its stimulus programme, sending yields far above target and stoking market speculation about an early hike in interest rates.
The Reserve Bank of Australia (RBA) declined to buy the April 2024 line in its regular market operation, even though yields were well above its target of 0.1%. The market responded by pushing the yield up further to 0.30%.
· BOJ set to hold fire as inflation struggles for lift-off
The Bank of Japan is set to keep monetary policy settings steady on Thursday and project inflation to stay below its 2% target for at least two more years, reinforcing market bets it will lag other central banks in dialling back crisis-mode policies.
In fresh quarterly estimates, the BOJ is set to slash its consumer inflation forecast for the year ending in March 2022 from the current 0.6%, sources have told Reuters.
Analysts expect no major change to the BOJ’s consumer inflation projection of 0.9% for fiscal 2022 and 1.0% for the following year, which would confirm price growth will stay well below the central bank’s elusive 2% target.
· ECB to push back over mounting rate-hike expectations
The European Central Bank is all but certain to keep policy unchanged on Thursday and push back against growing expectations for an interest rate hike next year, even though it may admit that inflation will be higher than projected.
· IMF sees strong foundations for global recovery, big downside risks
· Democrats at odds over 'billionaires tax' to fund sweeping Biden agenda
Senior Democrats in the U.S. Congress were at odds on Wednesday over a proposal to tax billionaires' assets to help pay for President Joe Biden's social and climate-change agenda, leaving it unclear if the idea had enough support to become law.
· Sunak promises more spending as UK emerges from pandemic
· CME's quarterly profit jumps, bitcoin futures surge
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