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Gold tracks dollar in choppy session; U.S. inflation data awaited

Gold prices climbed to their highest level since early September on Tuesday in tandem with a softer dollar, as investors awaited U.S. inflation data scheduled for later in the week.

·         Spot gold rose 0.3% to $1,828.74 per ounce by 13:44 p.m. ET, having earlier recorded its highest since Sept. 3 at $1,831.10.

·         U.S. gold futures settled 0.2% higher at $1,830.80.

·         The U.S. dollar, which gold has been tracking through the session, inched lower against its rivals, making the bullion less expensive for holders of other currencies.

·         “Investors are cautious near $1,830-$1,835 as we have not been able to breach that to the upside in July and August,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

  “If the market sees the consumer price index number is above expectations then the argument will certainly go that the Federal Reserve must now hike quicker,” Quantitative Commodity Research analyst Peter Fertig said. But “the Fed is not following a rule book,” he added.

·         Key central banks last week indicated interest rates would remain low in the near term, boosting the appeal of non-yielding gold and helping the metal post its best week since late August.

However, a tight U.S. labour market and the dislocation in global supply chains could result in a high reading for U.S. consumer prices due on Wednesday.

·         Also buoying gold, yields on the 10-year Treasury notes slipped to 1.4271%.

·         “Gold prices are on the cusp of a breakout,” TD Securities analysts said in a note. “Considering the extremely poor sentiment in precious metals across the last few months, the bar is low for prices to slice through trendline resistance.”

·         Elsewhere, spot silver declined 0.8% to $24.25 per ounce, platinum slipped 0.1% to $1,054.64 and palladium fell 2.4% to $2,021.35.

 

·         Fed officials on Tuesday said it is not clear that high inflation will become more entrenched than previously expected.

San Francisco Fed President Mary Daly said it will be mid-2022 before there is more clarity on the employment and inflation outlook and Minneapolis Fed President Neel Kashkari said he believes the forces that are currently keeping people out of the labor market and pushing up prices will prove to be temporary.

 

·         Dollar dips before U.S. inflation data

The dollar index dipped 0.11% to 92.948 while the euro gained 0.07% to $1.1594.

Elsewhere, the yen reached a one-month high of 112.73 against the greenback and last traded at 112.83.

 

·         Bitcoin rose to a record $68,564 before reversing course. It was last down 1.15% at $66,791. Ether hit a record high of $4,843.

 

·         Real yields tumble as traders eye inflation risk

 

·         Gasoline, auto retailing boost U.S. producer prices

 

·         Wholesale prices rose 8.6% year over year in October, tied for highest ever

Wholesale prices rose 8.6% from a year ago in October, their highest annual pace in records going back nearly 11 years, the Labor Department said Tuesday.

The government’s producer price index, which serves as a gauge of final demand prices from goods producers, rose 0.6% for the month, in line with Dow Jones estimates and an indicator that inflation pressures are continuing to burden the U.S. economy. The monthly pace was faster than the 0.5% increase in September.

Stripping out food, trade and energy prices, the index increased 0.4% month over month, slightly below the 0.5% estimate but an elevated pace from September’s 0.1% gain. On a year-over-year basis, core producer prices increased 6.2%. The year-over-year records go back to November 2010.

One-third of the increase in goods prices came from soaring gasoline, with prices rising 6.7%. Beef and veal prices represented the other side of the ledger, posting a collective decline of 10.3%. The index for light motor trucks, a key driver of inflation this year, moved lower as did residential electric power.

On the services side, more than 80% of the increase in final demand services price increases came from autos and auto parts, which increased 8.9%.

·         Consumer prices likely surged last month at their fastest pace in about 30 years

The consumer price index is expected to have risen nearly 6% in October, the most in three decades. Inflation could remain elevated into early next year, as rents and other costs continue to increase.

The Labor Department will report the latest CPI reading Wednesday at 8:30 a.m. ET. Economists polled by Dow Jones are expecting a jump of 0.6%, or a year-over-year gain of 5.9%. On a core basis, excluding food and energy, economists expect a gain of 0.4% or 4.3% year over year.

If the CPI reaches 5.9%, it would be the biggest year-over-year gain since December 1990. Consumer prices were 5.4% in September year over year.

·         Fed Chair: Lael Brainard Interviewed by Biden as Possible Powell Rival

 

·         Fed's Powell touts benefits of maximum employment

The U.S. Federal Reserve looks at a wide range of indicators in gauging how close the economy is to reaching full employment, Fed Chair Jerome Powell said on Tuesday, as he reiterated the benefits of targeting workers who often remain on the sidelines.

 

·         U.S. Treasury's Yellen says investment bills will boost productivity, labor force

U.S. Treasury Secretary Janet Yellen said on Tuesday that the bipartisan infrastructure package approved by Congress and President Joe Biden's proposed social and climate spending plan would increase U.S. productivity and the size of its labor force.

 

·         U.S. extends ban on securities investments in companies linked to China military

 

·         Japan manufacturers' mood falls to 7-month low in November - Reuters Tankan

 

·         COVID-19 UPDATES:

  

 

Reference: CNBC, Reuters, Worldometers