Gold eases on strong U.S. jobs data, inflation data eyed
Gold slipped on Thursday as the dollar firmed and data showed a big drop in U.S. jobless claims ahead of an inflation report that could influence the Federal Reserve’s monetary strategy.
· Spot gold was down 0.3% at $1,776.56 per ounce, while U.S. gold futures settled down 0.5% at $1,776.70.
· The number of Americans filing new claims for unemployment benefits dropped to the lowest in over 52 years.
· “The stronger-than-expected jobless claims numbers along with a firmer dollar is pulling down on gold, but there are also traders waiting for the CPI data,” said Bob Haberkorn, senior market strategist at RJO Futures.
The dollar strengthened, making gold less attractive for overseas buyers.
“If inflation numbers are going to be high, then gold will bounce right back up and make a move towards $1,800,” added Haberkorn.
· Friday’s U.S. Consumer Price Index (CPI) report will be followed by the Fed’s policy meeting on Dec. 14-15.
· Gold has traded in a relatively tight $1,760-$1,790 range since dropping below the key $1,800 level in late November, as investors attempted to gauge the Fed’s possible pace of tapering stimulus and raising interest rates.
· While gold is considered an inflation hedge, higher interest rates would increase the opportunity cost of holding non-yielding bullion.
· “Gold could see fresh bids if markets become fearful once more about pandemic-related developments or a ramp-up in geopolitical tensions between major economies,” said Han Tan, chief market analyst at Exinity.
· Apart from lingering uncertainties over the Omicron coronavirus variant, focus was also on tensions over Russia and its stance on Ukraine, the diplomatic boycott of the Beijing Olympics by some Western nations and U.S. sanctions on Iran.
· Spot silver fell 1.7% to $22.02 per ounce.
· Platinum dropped 1.9% to $938.50 per ounce.
· Palladium dipped 2% to $1,817.68 per ounce.
· Senate clears the way for Congress to raise the debt ceiling before Dec. 15 deadline
· U.S. weekly jobless claims at lowest level since 1969 as labor market tightens
The number of Americans filing new claims for unemployment benefits dropped to the lowest level in more than 52 years last week as labor market conditions continued to tighten amid an acute shortage of workers.
Initial claims for state unemployment benefits tumbled 43,000 to a seasonally adjusted 184,000 for the week ended Dec. 4, the lowest level since September 1969. Economists polled by Reuters had forecast 215,000 applications for the latest week.
Claims have declined from a record high of 6.149 million in early April of 2020. Applications typically increase as the weather gets colder, but economists say this seasonal pattern is not holding because of a tightening labor market.
· Dollar gains, equity rally stalls as caution returns
World stock markets stalled at two-week highs and oil prices fell on Thursday as increased restrictions in parts of the world to contain the spread of the Omicron COVID-19 variant tempered investor optimism about the economic recovery.
U.S. Treasury yields retreated following three straight days of gains for the benchmark 10-year note after data again showed a tight U.S. labor market ahead of a key inflation reading on Friday that could influence Federal Reserve policy-making.
The yield on 10-year Treasury note fell below 1.5%, down 1.8 basis points to 1.491%.
The dollar index , which tracks the greenback versus a basket of six currencies, rose 0.27% to 96.214. The euro fell 0.42% to $1.1294 and the yen slid 0.21% to $113.42.
· Current market pricing is for the Fed to enact its first 25-basis point rate hike in May or June. There’s about a 61% chance of three hikes coming by December, according to the CME’s Fed Watch tracker.
· Even if the year-over-year consumer price index gain comes in less than the expected 6.8%, the Fed will not back off plans to quicken the tapering of its bond-buying program, said Marc Chandler, chief market strategist at Bannockburn Global Forex.
"The Fed has made its pivot," he said. "The labor market is strong enough and has enough momentum to take care of itself and now it's got to turn our attention back to inflation."
· Biden administration signals Friday's inflation data could be high
President Joe Biden, bracing for another jump in inflation, sought to reassure Americans on Thursday that rises in energy costs and other key goods were starting to ease, but said the change might not be reflected in November data due on Friday.
The consumer price index (CPI) for November is expected to have risen 6.8% compared with the same month last year, a Reuters poll of economists showed, overtaking a 6.2% increase in October, which was the fastest gain in 31 years.
· IMF chief economist sees inflationary pressures, risks from Omicron
Central banks do not have the space to keep monetary policy loose and interest rates low, the International Monetary Fund's chief economist said on Thursday, also warning that the pandemic could turn out far more costly than estimated.
Gita Gopinath, IMF chief economist, said that it had estimated that a more transmissible SARS-CoV-2 variant such as Omicron could cost the global economy a further $5.3 trillion, in addition to the current projected loss of $12.5 trillion.
· Macron says EU's post-COVID economy needs new budget rules
· Xi's next term needs a new China portfolio, investors say
or global banks and fund managers drawing up their 2022 China investment strategies, one factor occupies their minds but eludes valuation models: President Xi Jinping's next five years in office.
Having done away with term limits in 2018, China's most powerful leader since Mao Zedong is steering the country back toward its socialist roots, upending financial markets.
Crackdowns on internet giants, property developers and education have MSCI's China index (.dMICN00000PUS) down 20% in 2021 against a 15% rise in world stocks (.MIWD00000PUS), while China's once-popular high-yield debt market has crumbled.
Reference: Reuters, CNBC
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