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Gold prices bounced on Wednesday as inflation worries pushed investors to the safe-haven metal, even as better-than-expected U.S. retail data strengthened the dollar making bullion expensive for holders of other currencies.

 

·         Spot gold rose 0.9% to $1,865.66 per ounce by 14:00 ET (1900 GMT), having dropped in the previous two days after a seven-session rally.

 

·         U.S. gold futures settled up 0.9% at $1,870.20.

 

·         SPDR GOLD HOLDINGS:

BUY BACK 0.88 TONNES AT 976.87 TONNES

Overall, the holdings of SPDR decline 5.87 tonnes in this month, but this year net sell 193.87 tonnes.

 

·         “The underlying support for gold and silver remains the inflationary pressures we continue to see in the market,” said David Meger, director of metals trading at High Ridge Futures.

 

·         The U.S. dollar, which also contends with gold as a safe store of value, touched its highest since July 2020, bolstered by better-than-expected U.S. retail data.

 

·         If Fed speakers, in the near term, signal asset purchase reductions may be speeded up to fight inflation or if the market believes rates would rise sooner than anticipated, bullion could come under some “light pressure,” Meger said.

 

·         Higher interest rates increase the opportunity cost of holding non-interest bearing gold.

 

·         The Fed began phasing out its bond-buying this month and expects to end purchases altogether by mid-2022. Its next policy-setting meeting is in mid-December.

 

·         Rate hikes remain a potential risk for gold and only a clear break above $1,875 may drive further gains, Carlo Alberto De Casa, external analyst at Kinesis Money said.

 

·         Rising prices, driven mostly by soaring energy costs, remain a concern in other economies as well.

 

·         British inflation hit a 10-year high, bolstering expectations the Bank of England will raise interest rates in December, while Canada’s annual rate accelerated again in October to match a February 2003 high.

 

·         Elsewhere, spot silver jumped 1.1% to $25.06 per ounce, platinum fell 0.1% to $1,060.40, and palladium climbed 1.2% to $2,184.51.

 

·         UPDATE 1-Silver demand shoots to highest since 2015, Silver Institute says

Global silver demand will rise to 1.029 billion ounces this year, up 15% from 2020 and exceeding a billion ounces for the first time since 2015, the Silver Institute said in a report on Wednesday.

The prediction is a slight downgrade from April, when the institute forecast demand for 2021 at 1.033 billion ounces.

 

·         US STOCKS-Rate hike jitters weigh on Wall Street; supply chain overshadows retail

 

·         U.S. homebuilding drops, construction backlog surges as shortages worsen

Single-family housing starts, which account for the largest share of the housing market, dropped 3.9% to a seasonally adjusted annual rate of 1.039 million units last month. The fourth-straight monthly decline pushed starts to the lowest level since August 2020. Homebuilding fell in all four regions, with large decreases in the Northeast, Midwest and West.

The densely populated South, where the bulk of homebuilding occurs, reported a 1.8% drop in single-family starts.

Construction costs jumped a record 12.3% year-on-year in October, according to producer price data published last week.

BUILDING PERMITS RISE

Starts for buildings with five units or more increased 6.8% to a rate of 470,000 units last month. Workers returning to offices and schools reopening for in-person learning, thanks to COVID-19 vaccinations, are fueling demand for rental apartments.

·         Fed's Evans says taper to take until mid-2022 to complete

Chicago Federal Reserve President Charles Evans on Wednesday reiterated that it will take until the middle of next year to complete the Fed's wind-down of its bond-buying program even as the central bank checks to see if high inflation recedes as he expects.

 

·         Fed's Waller says stablecoins do not need to be subject to full banking rulebook

A stronger regulatory and supervisory framework is needed to ensure that stablecoins are a safe form of payment, but they should not necessarily be subject to all of the same rules as banks, Federal Reserve Board Governor Christopher Waller said on Wednesday.

The policymaker said he disagrees with some of the recommendations made earlier this month in a report by the President's Working Group on Financial Markets, which called on Congress to regulate issuers of stablecoins like banks.

 

·         Bank of England's Mann confident UK inflation under control

British households, businesses and financial markets remain confident that the Bank of England will return inflation to its 2% target, BoE policymaker Catherine Mann said, after official data on Wednesday showed inflation at a 10-year high.

BoE Governor Andrew Bailey said on Monday that he had been concerned last month that markets might lose faith in the BoE's commitment to fighting inflation as prices rose, which in turn had prompted him to signal a rate rise was coming.

 

·         European Central Bank warns of bubbles in property and financial markets

The European Central Bank warned of stretched valuations in many asset markets, as the region continues to recover from the coronavirus pandemic on the back of ultra-low interest rates and massive stimulus measures.

 

 

·         U.S. asks Japan, China, others to consider tapping oil reserves, sources say

The Biden administration has asked some of the world’s largest oil-consuming nations to consider releasing some of their crude reserves in a coordinated effort to lower prices and stimulate the economic recovery, according to several people familiar with the matter.

Global oil prices touched seven-year highs in late October as oil demand has rebounded nearly to pre-pandemic levels, faster than the pace of supply. The Organization of the Petroleum Exporting Countries and allied producers, led by Saudi Arabia and Russia, have been adding 400,000 barrels per day to the market on a monthly basis. They resisted calls this month from U.S. President Joe Biden for steeper boosts.

 

·         Dispute over China tech measure delays vote on massive U.S. defense bill

The U.S. Senate delayed a procedural vote on a $750 billion annual defense policy bill on Wednesday as members of Congress argued over plans to attach it to legislation to boost U.S. technology competitiveness with China.

Senate Democratic Majority Leader Chuck Schumer set a morning procedural vote on the National Defense Authorization Act (NDAA), but it had not taken place by evening and lawmakers said it could slip until later in the week.

 

·         China Evergrande sells stake in HengTen for $273 mln

  

·         COVID-19 UPDATES: