MTS Help Center

Gold at 3-week low on strong U.S. data, rate-hike bets

Gold prices slipped to a three-week low on Wednesday as robust U.S. economic data lifted the dollar and Treasury yields, with jitters around a sooner-than-expected interest rate hike from the Federal Reserve adding to the downbeat mood.

·         Spot gold was down 0.4% at $1,783.18 per ounce by 02:23 p.m. ET (1923 GMT), after falling to its lowest since Nov. 4 at $1,777.80 earlier in the session.

·         U.S. gold futures settled flat at $1,784.30 per ounce.

·         Gold slid below the key $1,800 mark earlier this week as the re-nomination of Fed Chair Jerome Powell bolstered bets of faster monetary policy tightening, boosting the dollar and in turn making bullion more expensive for overseas buyers.

 

·         The gold market is being pressured by concerns the Fed may begin to ramp up its tapering or bring rate hikes at a more rapid pace than previously anticipated, said David Meger, director of metals trading at High Ridge Futures.

  

·         Various Fed policymakers said they would be open to speeding up the elimination of their bond-buying program if high inflation held and move more quickly to raise interest rates, minutes of the U.S. central bank's last policy meeting showed.

 

·         Gold investors also seem to be discounting for the possibility of moderating inflation, given the recent retreat in energy prices, ED&F Man Capital Markets analyst Edward Meir said.

·         Piling pressure were U.S. initial jobless claims falling to their lowest since 1969 and a separate report showing economic growth increased at a 2.1% annualized rate.

 

·         With inflows into gold-backed ETFs also subdued, short acquisitions by "trend followers" remain the primary contributor to flows, suggesting further downside to prices, TD Securities said in a note.

 

·         Spot platinum rose 0.5% to $974.03 per ounce.

·         While palladium dipped 0.7% to $1,854.32 and silver fell 0.9% to $23.42.

 

·         Fed's Daly says she is open to accelerating pace of bond taper

San Francisco Federal Reserve Bank President Mary Daly said on Wednesday she would be open to accelerating the pace of the central bank's tapering of asset purchases if inflation remained elevated and jobs growth stayed strong.

 

·         Fed members ready to raise interest rates if inflation continues to run high, meeting minutes show

 

 ·         Markets, though, are anticipating a more aggressive Fed.

Traders in contracts that bet on the future of short-term rates are indicating the Fed will raise its benchmark rate three times in 2022 in25 basis point intervals, though current official projections are for no more than one hike next year. However, those markets are volatile and can change quickly depending on the signals the Fed sends.

FOMC members expressed concern at the meeting that the continued high inflation readings could influence public perception and “expectations were becoming less well anchored” to the Fed’s 2% longer-run target.

·         Weekly jobless claims post stunning decline to 199,000, the lowest level since 1969

 

·         U.S. consumer spending surges in October; inflation heats up again

 

·         Key inflation figure for the Fed up 4.1% year over year, the highest since January 1991

 

·         U.S. core capital goods orders increase strongly in October

 

·         U.S. new home sales rise in October, September revised down

·         U.S. Thanksgiving air travel set to be busiest since pandemic began

 

·         Biden administration still seeking agreement from Mexico on return of asylum seekers

 

·         U.S. blacklists dozens of Chinese tech firms citing national security concerns

 

·         Former Trump energy secretary says releasing oil from reserves is ‘bad policy choice’

The Biden administration’s decision to release oil from U.S. reserves is a “mistake,” former U.S. Energy Secretary Dan Brouillette said on Wednesday.

“It’s not a supply emergency, and the only emergency I can … see in this case is a political emergency,” he said.

The Biden administration’s action shows they are concerned about the midterm elections in 2022, Brouillette said.

·             UK to expand development finance investment to boost growth

 

·             German economy could be pushed to brink of stagnation by year-end, ING says

Carsten Brzeski, global head of macro at ING Research, discusses the outlook for the German economy amid surging coronavirus cases and supply chain disruptions.

 

·         COVID-19 UPDATES:

·         WHO says fully vaccinated should wear masks and physically distance as Covid infections surge

 

·         COVID cases break records in Europe, prompting booster shot expansion

New cases have jumped 23% in the Americas in the last week, mostly in North America, in a sign that region might also face a resurgence of infections.

Many EU countries have already begun giving booster doses but are using different criteria to prioritise them and different intervals between the first shots and boosters.

 

·         Germany considers a full Covid lockdown and mandatory vaccines

 

Reference: CNBC, Reuters, Worldometers