· Gold prices hovered near a two-month peak on Tuesday, supported by a softer dollar and U.S. bond yields, as investors awaited key U.S. inflation data to gauge the Federal Reserve’s next move on rate hikes.
· Spot gold was little changed at $1,824.15 per ounce by 0624 GMT, about $3 shy off a two-month peak scaled earlier in the session.
· U.S. gold futures were flat at $1,828.10.
· A subdued dollar and lower benchmark 10-year Treasury yields kept bullion’s appeal intact.
· A weaker dollar reduces bullion’s cost for buyers holding other currencies, while lower yields decrease non-interest bearing bullion’s opportunity cost.
· “A rise through $1,825 could trigger a technical pattern that could take gold back to the $2,000 zone,” said Jeffrey Halley, senior market analyst at OANDA.
“However, this will rely on the dollars downside correction persisting for longer and the narrative around central bank keeping interest rates low for longer to remain intact.”
· Focus is now on Wednesday’s Consumer Price Index inflation data that could test the Fed’s stance on rate hikes, as tightness in the labour market combined with global supply chain issues could result in another high reading.
· It also comes on the heels of several Fed officials expressing growing concerns over more persistent price increases.
· But Fed Vice Chair Richard Clarida and Chicago Fed President Charles Evans suggested a rate hike was not yet on the cards.
· Gold has benefited from near-zero interest rates introduced during the pandemic as they reduce bullion’s opportunity cost.
· “I wouldn’t expect anything imminent from the Fed but an above-consensus CPI could make the market’s anticipation of a 2022 rate hike more likely”, Nicholas Frappell, a global general manager at ABC Bullion said, adding that such a scenario would be potentially negative for gold.
· Spot silver fell 0.3% to $24.37 per ounce. Platinum eased 0.5% to $1,050.60 and palladium dropped 0.8% to $2,053.71.
· Inflation is unlikely to fade as economic stimulus remains, says ANZ economist
Richard Yetsenga, ANZ’s chief economist, says policy support has remained in a “far, far more stimulatory position” even as economies are reopening.
· Fed says China’s real estate troubles could spill over to the U.S.
The U.S. Federal Reserve warned Monday of potential spillover from China’s real estate troubles to the U.S. financial system.
· China’s property market could see more pain, even as Evergrande crisis seems to be abating
· China’s Communist Party has begun a four-day meeting at which President Xi Jinping is expected to make a move to extend his rule indefinitely.
Xi wants to extend his ambitious plans for the domestic economy and its global economic and geopolitical power.
· Japan's October service sector sentiment at highest in nearly 8 years
Japan's service sector sentiment index in October rose to its highest level in nearly eight years after state-of-emergency curbs were eased last month and new COVID-19 cases slid.
The economy watchers' index advanced 13.4 points to 55.5 in October, the highest level since January 2014, the government data showed. It was the second straight month of increase and marked the biggest gain since June 2020.
· German exports fall for second consecutive month in September
German exports fell for the second consecutive month in September while imports nearly stagnated, the statistics office said on Tuesday, in a further sign that supply chain disruptions are complicating the recovery of Europe’s largest economy.
Seasonally adjusted exports dropped 0.7% on the month to 112.3 billion euros ($129.75 billion), compared to the no change in volumes economists had expected.
Imports were up 0.1% to 99.2 billion euros, weaker than the 0.6% rise predicted by analysts.
· Philippines Q3 GDP slows less than expected, putting 2021 target in reach
· Saudi Q3 GDP growth at 6.8%, highest since 2012
· Islamic State violence dents Taliban claims of safer Afghanistan
Reference: Kitco, CNBC, Reuters, Worldometers
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