Gold set for third weekly gain as U.S. bond yields, dollar tumble
· Gold prices on Friday were set to mark a third straight weekly gain as a retreat in U.S. bond yields and a tepid dollar lifted bullion’s safe-haven appeal.
· Spot gold was steady at $1,797.82 per ounce, as of 0100 GMT, but gained 0.3% so far this week. U.S. gold futures dropped 0.2% to $1,799.40 per ounce.
· Benchmark 10-year U.S. Treasury yields were set for their biggest weekly decline since early September, reducing the opportunity cost of holding non-yielding bullion.
· The U.S. dollar was also headed for a third weekly decline. A weaker greenback makes gold more attractive to buyers holding other currencies.
· European Central Bank President Christine Lagarde acknowledged higher inflation on Thursday, but pushed back against market bets that price pressures would trigger an interest rate hike as soon as next year.
· Market participants now await the U.S. Federal Reserve policy meeting due on Nov. 3.
· Investors are gauging what a furious flattening of the U.S. yield curve suggests about expectations for growth and how aggressively the U.S. Federal Reserve may tighten monetary policy in the face of surging inflation.
· The U.S. economy grew at its slowest pace in more than a year in the third quarter, data on Thursday showed.
· Analysts have trimmed their gold price forecasts for the rest of this year and next, a Reuters poll showed on Thursday.
· Gold is traditionally seen as an inflation hedge. However, reduced stimulus and interest rate hikes would push government bond yields up, translating into a higher opportunity cost for holding gold, which pays no interest.
· In another poll, forecasts for palladium and platinum prices were also lowered with a chip shortage forcing auto makers to cut production of vehicles containing the metals.
· Spot silver fell 0.3% to $24.02 per ounce and was set for its worst week since mid-September.
· Platinum dipped 0.1% to $1,018.24 per ounce, while palladium rose 0.2% to $1,992.17.
· Futures on the fed funds rate , which track short-term rate expectations, have fully priced in a quarter-point tightening by July 2022, factoring in another rate increase by December.
Surging inflation expectations based on key bond indicators as well as higher oil prices have stoked what some analysts believed to be an ambitious rate outlook.
· China c.bank makes biggest weekly short-term cash injection in 21 months
China’s central bank on Friday injected 200 billion yuan ($31.29 billion) through seven-day reverse repurchase agreements into the banking system, bringing the weekly net cash injection to the highest in 21 months.
With 100 billion yuan worth of reverse repos maturing on Friday, the central bank has injected 100 billion yuan on a net basis on the day.
For the week, the PBOC has net injected 680 billion yuan through reverse repos, biggest weekly cash offering since January 2020. ($1 = 6.3917 Chinese yuan)
· France's economy roars in Q3, inflation jumps
France’s economy grew a faster-than-expected 3% in the third quarter, preliminary data showed on Friday, propelled by a pick-up in consumer spending and exports as the euro zone’s number two economy rebounds from the COVID-19 pandemic.
· Detroit's chip woes drag on U.S. economic growth
Reference: Reuters, CNBC
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