Gold inches higher as U.S. Treasury yields ease
Gold prices rose slightly on Wednesday as U.S. Treasury yields eased from their recent highs, reducing the metal’s opportunity cost, while investors looked ahead to key inflation data that could settle the course of interest rates.
Spot gold rose 0.1% to $1,785.48 per ounce by 0029 GMT. U.S. gold futures were up 0.1% at $1,786.10.
Benchmark 10-year and 30-year U.S. Treasury yields pulled back from their one-week highs hit on Tuesday.
The U.S. Consumer Price Index (CPI) report is due on Friday, and economists in a Reuters poll forecast November CPI at 0.7%.
The Bank of England may hold off again next week on becoming the world’s first big central bank to raise interest rates from their pandemic lows, due to the emergence of the Omicron variant of the coronavirus.
Euro zone inflation could exceed the European Central Bank’s forecast in the long term, so there is no reason now to boost a legacy bond purchase program when an emergency scheme ends next March, ECB policymaker Madis Muller said.
Reduced stimulus and interest rate hikes tend to push government bond yields up, raising the opportunity cost of non-interest bearing gold.
U.S. President Joe Biden plans to put forward more nominees for open positions on the U.S. Federal Reserve Board by the end of the month, the White House said.
Biden warned Russian President Vladimir Putin that the West would impose “strong economic and other measures” on Russia if it invades Ukraine.
The average prices of gold, silver and platinum next year will be almost the same as in 2021, while the average price of palladium will fall, consultants Metals Focus said.
Spot silver rose 0.2% to $22.51 an ounce. Platinum gained 0.3% to $954.26 and palladium added 0.1% to $1,855.14.
· Aussie buoyant, dollar listless as omicron optimism lifts risk assets
The Australian dollar hit its strongest level in a week on Wednesday amid a pick-up in risk appetite on signs omicron may be less severe than other Covid-19 variants, but still vulnerable to existing vaccines.
The Aussie rose to $0.7124 for the first time since Dec. 1, and traded at 80.80 yen, not far from Tuesday’s one-week top at 80.93.
The Canadian dollar traded at C$1.2645 per greenback, near the two-week high at C$1.2635 set overnight.
The Bank of Canada decides policy later on Wednesday, and while economists expect no change at that meeting, they forecast rate hikes as early as the middle of next year in a recent Reuters poll.
The British pound recovered a bit of composure, consolidating around the middle of this week’s trading range this week at $1.32415.
The euro edged 0.05% higher to $1.12735, after touching its lowest since Nov. 26 at $1.1228 in the previous session.
The dollar index, which measures the greenback against six major peers, was little changed at 96.269, treading water in the middle of its range over the past 2-1/2 weeks.
The JOLTS report on U.S. job openings due later Wednesday should provide further evidence of a tightening labour market, potentially adding fodder for bets on earlier Fed tightening, which could boost the dollar.
· Money markets are currently fully priced for a quarter point rate increase by June.
· Chinese developer Kaisa halts trading in Hong Kong again as real estate concerns resurface
· Australia joins diplomatic boycott of Beijing Winter Games
· Pfizer CEO says omicron appears milder but spreads faster and could lead to more Covid mutations
· U.S. boosters surge to all-time high on Omicron fears
· South Korea’s new Covid-19 cases top 7,000 for the first time
· Germany records highest daily COVID deaths since February
· Japan downgrades Q3 GDP on deeper hit to consumer spending
Japan's economy declined an annualised 3.6% in July-September, revised Cabinet Office data showed Wednesday, worse than the preliminary reading of a 3.0% contraction.
· Asia’s inflation is lagging behind, but a rise is inevitable, says S&P Global
Terry Chan of S&P Global says inflation in the continent has been relatively mild, but central banks may still tighten rates to defend their currencies.
· Oil prices ease as investors wait for assessment of Omicron's impact
Oil prices eased on Wednesday, taking a breather after two days of gains, as investors waited for an assessment of full impact of the Omicron coronavirus variant on global economy and fuel demand as well as the effectiveness of existing vaccines.
Brent crude futures dropped 19 cents, or 0.3%, to $75.25 a barrel at 0519 GMT, after settling 3.2% higher on Tuesday. U.S. West Texas Intermediate crude was at $71.82 a barrel, down 23 cents, or 0.3%, having gained 3.7% in the previous session.
· Mainland Chinese stocks bounce more than 1%; Chinese social media giant Weibo debuts in Hong Kong
Mainland Chinese markets jumped in afternoon trade on Wednesday. Troubled Chinese real estate developers are back in the spotlight, while Chinese social media giant Weibo had a disappointing market debut in Hong Kong.
The Shanghai composite climbed 1%, while the Shenzhen component rose 1.73%. The CSI 300 index jumped 1.24%, while the Chinext composite bounced by about 1.32%.
Hong Kong’s Hang Seng index hovered slightly above the flatline.
· Chinese real estate woes
Meanwhile, trading in shares of major Chinese real estate developer Kaisa will be suspended on Wednesday, according to a notice on the Hong Kong exchange. Following the Evergrande crisis, Kaisa has also been embroiled in debt issues, as it looked unlikely that it met its $400 million offshore debt deadline on Tuesday, according to Reuters. It also failed to reach a notes exchange deal with bondholders last week, increasing its chances of default, analysts have said.
This is the second trading halt. The developer had suspended trading in November after missing a payment on a wealth management product earlier this month.
Japan’s Nikkei 225 bounced 1.42% to close at 28,860.62, and the Topix climbed 0.62% to 2,002.24. Japan reported that its economy shrank 3.6% in the third quarter, worse than the initial estimate of a 3.0% contraction, revised government data showed on Wednesday, according to Reuters.
South Korea’s Kospi was 0.3% higher, while in Australia, the S&P/ASX 200 bounced 1.25% to close at 7,405.40.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.6%.
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