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Gold hits near two-month peak as cenbanks strike dovish tone

Gold rose more than 1% on Friday to a near two-month high as major central banks’ dovish tone on interest rates this week lifted the demand for the safe-haven metal.

·         Spot gold was up 1.2% at $1,813.36 per ounce by 01:45 p.m. ET (1745 GMT), recovering from a 0.3% drop sparked by data showing U.S. employment increased more than expected in October.

·         U.S. gold futures for December delivery settled up 1.3% at $1,816.80 per ounce.

·         The limited reaction to the data shows “despite the strong labor market report, it is not going to change what Federal Reserve Chair Jerome Powell signalled this week,” said Edward Moya, senior market analyst at brokerage OANDA.

 

·         The Federal Reserve on Wednesday stuck to its view that inflation would prove “transitory” and would likely not require a fast rise in interest rates. Following that, the Bank of England surprised markets by keeping rates on hold.

 

·         Near-zero interest rates to spur economic growth during the COVID-19 pandemic have propelled gold prices to new highs over the last two years, as easy monetary policy cuts the opportunity cost of holding non-yielding assets.

 

·         This week, the central bank announcements helped gold reverse from early losses to be on course for its best weekly gain since late August of about 1.8%.

 

·         “Gold bulls seem to be drawing strength from the Fed’s unhurried stance on raising interest rates,” said FXTM analyst Lukman Otunuga, adding that subdued treasury yields were also underpinning the gains.

 

·         Yields on the U.S. 10-year treasury notes slipped to their lowest level in about a month.

 

·         Physical gold demand in India, the world’s second largest consumer, jumped this week as buyers took advantage of a slight dip in prices and bought the precious metal during the festival season.

 

·         Spot silver rose 1.2% to $24.05 per ounce.

·         Platinum rose 0.7% to $1,032.71 per ounce and palladium was up 1.3% at $2,025.32 per ounce, both on course for a weekly gain.

 

·         Strong U.S. payrolls brighten economic outlook; millions still missing from workforce

The Labor Department's closely watched employment report's survey of establishments on Friday showed nonfarm payrolls increased by 531,000 jobs last month. Data for September was revised higher to show 312,000 jobs created instead of the previously reported 194,000. Economists polled by Reuters had forecast payrolls rising by 450,000 jobs.

UNEMPLOYMENT RATE FALLS

Details of the smaller survey of households, from which the unemployment rate is derived were mixed. The unemployment rate fell to a 19-month low of 4.6% from 4.8% in September. The number of people unemployed for 27 weeks or more dropped 357,000 to 2.3 million. They accounted for 31.6% of the 7.4 million people officially unemployed last month.

 

·         TREASURIES-Yields fall, curve flattens after strong U.S. jobs data

The benchmark 10-year yield, which fell to its lowest level since Sept. 24 at 1.436% and marked its biggest downward move since July 19, was last 7.4 basis points lower at 1.4496%.

 

·         Dollar soars to more than 1-year high after jobs data, then pulls back

The dollar jumped on Friday to hit its highest level in more than a year, after data showed stronger U.S. job growth than expected in October, but retreated a bit in late trading as risk appetite improved and stocks rallied.

The dollar index , which measures the greenback against a basket of six rivals, rose as high as 94.634 after the jobs report, its firmest since Sept. 25, 2020.

·         Dollar firm as U.S. inflation poses next test

·         Stocks could soar to new heights in week ahead — even though inflation data may come in hot

 

·         Congress passes $1.2 trillion bipartisan infrastructure bill, delivering major win for Biden

Congress has passed a $1.2 trillion bipartisan infrastructure bill, delivering on a major pillar of President Joe Biden's domestic agenda after months of internal deliberations and painstaking divisions among Democrats.

The final vote was 228-206. Thirteen Republicans voted with the majority of Democrats in support of the bill, though six Democrats voted against it.

The bill now heads to the President's desk to be signed into law, following hours of delays and internal debating among Democrats on Friday, including calls from Biden to persuade skeptical progressive members of the Democratic caucus.

 

·         China Oct exports beat forecasts, offer buffer to slowing domestic economy

China’s export growth slowed in October but beat forecasts, helped by booming global demand ahead of winter holiday seasons, an easing power crunch and an improvement in supply chains that had been badly disrupted by the coronavirus pandemic.

However, imports missed analysts’ expectations, likely pointing to the overall weakness in domestic demand.

Outbound shipments jumped 27.1% in October from a year earlier, slower than September’s 28.1% gain. Analysts polled by Reuters had forecast growth would ease to 24.5%.

Imports jumped 20.6% in October from a year earlier, accelerating from a 17.6% gain in September but well below expectations for a rise of 25%.

 

·         China's Oct trade surplus with the United States at $40.75 billion

 

·         China's forex reserves rise in Oct for first time since July

China’s foreign exchange reserves in October rose on a monthly basis for the first time since July, official data showed on Sunday, as the dollar slipped against a basket of other major currencies.

China’s reserves, the world’s largest, reached $3.218 trillion at the end of October, up 0.53% from a month earlier, according to data from the State Administration of Foreign Exchange (SAFE).

That was higher than the $3.197 trillion forecast in a Reuters poll of analysts and up from $3.128 trillion in October 2020.

 

·         Japan economic stimulus seen topping $265 bln, require new debt -Kyodo

Japan is considering an economic stimulus package worth more than 30 trillion yen ($265 billion) aimed at easing the pain from the COVID-19 pandemic, a plan that would require issuing new debt, Kyodo news reported.

Part of the spending will come from funds carried over from last year's budget, Kyodo reported late on Sunday.

 

 

·         COVID-19 UPDATES:

 

·         Pfizer says its antiviral pill slashes risk of severe COVID-19 by 89%