Gold prices inched higher on Tuesday as investors' attention turned to U.S. inflation data due this week, which could influence the pace at which the Federal Reserve hikes interest rates.
· Spot gold was up 0.2% to $1,782.39 per ounce by 01:40 p.m. ET (1840 GMT).
· U.S. gold futures settled up 0.3% at 1,784.70.
· "It seems to be more of a consolidation move right now," said Craig Erlam, senior market analyst at OANDA. He said the market is keeping an eye on the Fed meeting this next week and investors are seeking more clarity on interest rates at a time of uncertainty around the Omicron coronavirus variant.
· Friday's U.S. Consumer Price Index report could influence the Fed's monetary policy in the run up to the Federal Open Market Committee meeting on Dec. 14-15.
· The Biden-Russia phone call is being watched closely as any major geopolitical uncertainty would support gold, but bullion prices could drop if the Omicron situation does not worsen, said Jim Wyckoff, a senior analyst at Kitco Metals.
· U.S. President Joe Biden told Russian President Vladimir Putin on Tuesday the West is concerned Russia will invade Ukraine and warned of "strong economic and other measures" as punishment should Moscow start a military conflict.
· Global stocks rose on the day as concerns around the Omicron variant eased after top U.S. infectious disease official, Anthony Fauci, told CNN "it does not look like there's a great degree of severity" so far.
· Capping gold's gains, the dollar (.DXY) rose, raising bullion's cost for overseas buyers.
· Platinum gained 1.7% to $953.06 an ounce, palladium added 0.5% to $1,845.45 and silver rose 0.6% to $22.49.
· Average prices of gold, silver and platinum next year will be almost the same as in 2021, while palladium will fall, consultants Metals Focus said, predicting the oversupply of all the metals except silver.
· Easing Omicron COVID-19 variant worries and a timely booster shot of Chinese stimulus helped lift riskier currencies on Tuesday with the Australian dollar leading the charge.
Global stock markets and oil gained, leaving traders to dump safe-haven currencies and bonds, as markets took confidence from reports in South Africa earlier in the week saying that Omicron cases there had only shown mild symptoms.
The dollar index was steady and riskier currencies picked up as traders bet that the Omicron variant would not be as severe as previously expected.
The U.S. dollar was firmer versus its major currency peers, with the U.S. dollar Currency Index up 0.1% at 96.378, a 1-week high.
Data on Tuesday showed the U.S. trade deficit narrowed sharply in October as exports soared, potentially setting up trade to contribute to economic growth this quarter.
· Sterling remains near 2021 lows with rate hike bets in doubt
Sterling was pinned near 2021 lows against the U.S. dollar amid growing expectations that the Bank of England will keep interest rates unchanged next week.
Sterling was flat against the dollar at $1.326, not far from last week's 2021 low below $1.32. Against the euro , the pound was up 0.15%, hitting its highest in almost a week at 84.95 pence.
If the Bank of England does end up raising interest rates on Dec. 16, it could trigger a squeeze on sterling short positions.
· Money markets are assigning a 50% probability of a 15 bps rate hike next week, down from nearly 70% probability two weeks ago.
· Record exports sharply narrow U.S. trade deficit
The U.S. trade deficit narrowed sharply in October as exports soared to a record high, potentially setting up trade to contribute to economic growth this quarter for the first time in more than a year.
The report from the Commerce Department on Tuesday, which also showed imports rising to an all-time high, added to a tightening labor market, strong consumer spending as well as services and manufacturing activity that have suggested an acceleration in growth was underway as the year winds down.
The trade gap plunged 17.6% to a six-month low of $67.1 billion. That was the biggest percentage drop since April 2015, reflecting an increase in the flow of goods and services following disruptions caused by the COVID-19 pandemic.
Exports of industrial supplies and materials increased $6.4 billion, with shipments of crude oil advancing $1.2 billion.
· U.S. third-quarter labor costs revised sharply higher
U.S. unit labor costs surged more than initially thought in the third quarter, suggesting inflation could remain high for a while.
The Labor Department said on Tuesday that unit labor costs, the price of labor per single unit of output, accelerated at a 9.6% annualized rate last quarter. That was revised up from the 8.3% pace reported in November.
Labor costs rose at a 5.9% pace in the April-June quarter. They increased at a 6.3% rate compared to a year ago, instead of the previously reported 4.8% rate.
U.S. House poised to vote on bill to speed passage of debt limit increase
The U.S. House of Representatives on Tuesday plans to vote on legislation easing the way for Congress to pass an increase in the $28.9 trillion limit on federal borrowing authority and avoid a looming default on the nation's debt.
· China's Nov. soybean imports up on month, boosted by U.S. cargoes
· French economy set for fourth quarter growth slightly below 0.75% - central bank
· Omicron Covid variant has spread to more than 50 countries and 19 U.S. states, CDC director says
· U.S. boosters surge to all-time high on Omicron fears
· China condemns U.S. diplomatic boycott of Beijing Olympics
China on Tuesday accused the United States of betraying Olympic principles and said Washington would "pay a price" for its diplomatic boycott of the upcoming Winter Games in Beijing even as a top International Olympic Committee official voiced respect for the U.S. decision.
The White House announced on Monday that U.S. government officials will boycott the Winter Olympics over China's human rights "atrocities," though the action allows American athletes to travel to Beijing to compete.
· Biden warns Putin of sanctions, aid for Ukraine military if Russia invades
· Biden and Putin square off for 2 hours as Ukraine tensions mount
Face to face for just over two hours, President Joe Biden and Russia’s Vladimir Putin squared off in a secure video call Tuesday as the U.S. president put Moscow on notice that a Russian invasion of Ukraine would bring enormous harm to the Russian economy.
The highly anticipated call between the two leaders came amid growing worries by the U.S. and western allies of a Russian invasion of neighboring Ukraine. Putin came into the meeting seeking guarantees from Biden that the NATO military alliance will never expand to include Ukraine, which has long sought membership. The Americans and their NATO allies said in advance that Putin’s request was a non-starter.
As the U.S. and Russian presidents conferred, Ukrainian officials grew only more anxious about the tens of thousands of Russia troops that have been deployed near their border.
· Japan’s economy contracted 3.6% in the third quarter, more than initial estimates suggested
· Japan manufacturers' sentiment rises to 4-month high in Dec - Reuters Tankan
· Taiwan Nov exports hit record, outlook good ahead of year-end
Taiwan's exports rose for a 17th straight month in November to a new high as its manufacturers gained from sustained demand for consumer electronics in the coming year-end shopping season and amid a global shortage of computer chips.
Exports last month were the highest monthly figure on record, rising 30.2% from a year earlier to $41.58 billion, the Ministry of Finance said on Tuesday.
Reference: CNBC, Reuters
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