Gold prices were flat on Tuesday, as a firmer dollar and U.S. Treasury yields weighed on its appeal and confined the metal to a tight $4 range.
Spot gold was little changed at $1,778.79 per ounce by 0130 GMT. U.S. gold futures were flat at $1,780.00.
Financial markets, which have struggled this year to decipher central bankers' policy signals, face their biggest challenge yet in December when in the space of 24 hours the Federal Reserve, ECB and Bank of England hold crucial meetings.
Euro zone finance ministers remained upbeat on Monday about economic growth prospects despite the Omicron coronavirus variant, and they agreed to continue moderately supportive fiscal policy next year.
The Perth Mint's sales of gold products in November jumped about 94% from the previous month to an eight-month peak, the refiner said on Monday.
Spot silver fell 0.2% to $22.31 an ounce. Platinum was steady at $938.00 and palladium dropped 0.3% to $1,849.19.
· Gold Price Forecast: XAU/USD remains vulnerable while below the $1,792 critical resistance
The bearish grip is still intact on the yellow metal. As FXStreet’s Dhwani Mehta notes, risks remain skewed to the downside amid ebbing Omicron fears.
Risk-on mood at full steam amid easing Omicron fears
“The risk-on flows remain in vogue, as China continues to pledge support measures to stimulate economic growth while global scientists and experts downplay risks from the new covid variant. The Reserve Bank of Australia’s (RBA) patient policy stance also added to the market’s optimism.”
“The bears defied the Golden Cross confirmation, as the powerful resistance (confluence of the 50, 100 and 200-DMAs) around $1,792 continues to cap the upside attempts. A daily closing above the key confluence will expose the $1,800 barrier. The further recovery could call for a retest of Wednesday’s high at $1,809, above which the previous month’s high at $1,814 will put to test.”
“On the downside, Friday’s low at $1,766 could come to the rescue of gold bulls, below which the crucial support is seen at the horizontal trendline at $1,760. Further south, the $1,750 psychological level will challenge the bullish commitments.”
· Safe haven currencies pressured by hopes omicron is mild
The dollar was supported against safe-haven currencies such as the Japanese yen on Tuesday, hanging on to an overnight jump made with U.S. yields as investors hoped early signs the omicron variant may be mild will be proved correct.
Riskier currencies have also found buyers and the Australian dollar firmed into a central bank meeting that will determine whether or not the Reserve Bank of Australia (RBA) follows the Federal Reserve with talk of early tapering.
The Aussie had its best day in seven weeks on Monday, rising 0.7%, and hovered around $0.7040 on Tuesday ahead of the RBA at 0330 GMT. The RBA already abandoned its yield target last month, so any further shift in policy or tone will surprise traders.
The yen nursed a 0.6% overnight drop, its largest in two weeks, at 113.47 per dollar. The Swiss franc, another safe-haven currency, suffered its largest one-day percentage fall in nearly three months on Monday. Dropping through its 200-day and 50-day averages to 0.9255 per dollar.
Pressure on the euro has resumed as bets firm on higher U.S. interest rates and it fell about 0.2% on Monday to leave it at $1.1283 in early Asia trade.
Fed funds futures have priced in more than two full rate hikes next year, beginning in May and overnight U.S. yields rose along the curve lifting 10-year rates 7.6 basis points and back above 1.4%.
China, facing a slowing economy, is going in the opposite direction and eased policy overnight with a second cut this year in banks’ reserve requirements — though that only seemed to buttress the positive mood and the yuan was steady.
Sterling and the kiwi are the outliers and mostly missed out on a bounce. Sterling last sat at $1.3259, not far above last week’s 11-month trough of $1.3194 while the kiwi traded at a one-year low of $0.6740 on Tuesday.
Speculators are short sterling and omicron’s emergence has added to bets that the Bank of England holds fire on hiking rates at next week’s meeting.
· Republican McConnell says he will probably support Powell's Fed nomination
U.S. Senate Republican leader Mitch McConnell said on Monday he would probably end up supporting Federal Reserve Chair Jerome Powell's nomination for a second four-year term.
· China November export growth slows but imports accelerate
China’s exports growth lost steam in November, pressured by a strong yuan, weakening demand and higher costs, but import growth accelerated and came in well above expectations, pointing to stronger domestic activity.
Exports rose 22% on-the-year and imports jumped 31.7% in November, customs data showed on Tuesday.
Analysts in a Reuters poll had forecast November exports would increase 19.0% after jumping 27.1% the previous month.
Imports were forecast to have risen 19.8%, according to the poll, versus a 20.6% gain in October.
· Japan to review budget balance timing early next year -PM Kishida
Japan will review the timeframe early next year for its target of balancing the budget, Prime Minister Fumio Kishida said on Tuesday, brushing aside prospects that it could ditch the goal to further boost spending.
The government unveiled a record $490 billion spending package last month to support a fragile economy, bucking a global trend towards withdrawing crisis-mode stimulus measures.
· Japan's Oct household spending extends decline on COVID-19 drag
Household spending fell 0.6% in October from a year earlier, after a 1.9% decline in September and a 3.0% drop in August, government data showed, matching the median market forecast in a Reuters poll.
· India c.bank may refrain from reverse repo hike on Omicron worry
· Oil extends gains on easing omicron fears, Iran delay
Oil prices edged up on Tuesday after a near 5% rebound the day before as concerns about the impact of the omicron variant on global fuel demand eased while Iran nuclear talks hit roadblocks, delaying the return of Iranian crude supplies.
Brent crude futures rose 34 cents, or 0.5%, to $73.42 a barrel at 0124 GMT, after settling 4.6% higher on Monday. U.S. West Texas Intermediate crude was at $69.92 a barrel, up 43 cents, or 0.6%, building on a 4.9% gain in the previous session.
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