Gold prices inched higher on Monday as investors squared positions ahead of key central bank meetings this week, with the Federal Reserve likely to signal the pace at which it may wind down pandemic-era economic support measures.
· Spot gold was up 0.2% at $1,786.19 per ounce as of 01:48 p.m. ET.
· U.S. gold futures settled up 0.2% at $1,788.30.
· “It’s a pretty quiet day for gold as the market awaits the FOMC’s meeting to see what central banks have to say about inflation and interest rates,” said Bob Haberkorn, senior market strategist at RJO Futures.
“The fact that no one is expecting a rate increase this week by any central bank is lending some support to gold” and unless the Fed announces immediate rate hikes next quarter, gold could be over $1,800 by the year-end, Haberkorn added.
Preventing a breakout in gold from its recent $1,760-$1,795 range, the dollar firmed, making bullion more expensive for overseas buyers.
· “In the short- to medium-term, gold’s not going anywhere until we get an idea of how much the Fed accelerates tapering and whether or not they are particularly hawkish in their statement,” said Michael Hewson, chief market analyst at CMC Markets UK.
Although gold is considered an inflation hedge, interest rate hikes raise the opportunity cost of holding non-yielding bullion.
· Apart from the Fed, the European Central Bank, the Bank of England, and the Bank of Japan are scheduled to meet later this week.
· Gold may be subdued in the first half of 2022 as the rate-hike cycle kicks off, Commerzbank said in a note, forecasting gold at $1,900 at end-2022, about $200 lower than its previous outlook.
A positive demand outlook would lift silver to $26 next year, Commerzbank added.
· Elsewhere, spot silver was up 0.4% at $22.25 per ounce.
· Platinum fell 1.7% to $926.50.
· Palladium slumped 4.8% at $1,676.14.
· U.S. dollar advances as Fed seen concluding asset buys sooner than expected
The dollar rose on Monday ahead of a slew of central bank meetings this week led by the Federal Reserve, with investors expecting the U.S. central bank to announce it will wrap up its bond purchases sooner than expected, as they look for clues on timing of interest rate increases next year.
Aside from the Fed, the European Central Bank, Bank of Japan, Bank of England, Swiss National Bank, and Norges Bank, among others, all have policy decisions in the next few days.
The dollar index , which measures the greenback against six major peers, was up 0.2% at 96.297. The euro was down 0.2% at $1.1291.
Against the yen, the dollar was up 0.1% at 113.49 yen .
· Former Fed governor: U.S. must step back on spending and find source of inflation
Former Federal Reserve governor and deputy dean at the University of Chicago Booth School of Business, Randall Kroszner, gives his take on the U.S. inflation rate and the outlook for the Federal Reserve’s December meeting.
· Morgan Stanley CEO Gorman says Fed may need to move more quickly on rates
Morgan Stanley (MS.N) Chief Executive James Gorman believes the Federal Reserve may need to move more quickly on interest-rate rises, he said in an interview with CNBC on Monday.
Investors are anticipating the U.S. central bank will say later this week it plans to wrap up its bond purchases sooner than expected. They are looking for clues on the timing of possible interest rate rises next year.
"We are heading to a rising interest-rate environment," Gorman said. "If I were the Fed I would start moving a little quicker rather than later, store away some ammunition and accept the reality."
· Omicron can hit fully vaccinated, Oxford study says, as UK prepares for tidal wave of cases
Two doses of the Oxford-AstraZeneca or Pfizer-BioNTech Covid-19 vaccines are substantially less effective at warding off omicron compared to previous variants of the coronavirus, scientists have found.
However, the researchers were optimistic that a booster shot would improve immunity against the new, highly transmissible variant.
· China’s Xi is set to meet Russia’s Putin virtually on Wednesday
· Russia says it may be forced to deploy mid-range nuclear missiles in Europe
Russia said on Monday it may be forced to deploy intermediate-range nuclear missiles in Europe in response to what it sees as NATO's plans to do the same.
The warning from Deputy Foreign Minister Sergei Ryabkov raised the risk of a new arms build-up on the continent, with East-West tensions at their worst since the Cold War ended three decades ago.
· El-Erian says ‘transitory’ was the ‘worst inflation call in the history’ of the Fed
· Britain reports first death with Omicron coronavirus variant
· Two-dose vaccines induce lower antibodies against Omicron, study finds
· Oil eases on worries Omicron could reduce demand
Oil futures eased on Monday on worries that rising coronavirus cases around the world could reduce crude demand as new doubts emerged about the effectiveness of vaccines against the Omicron variant.
Brent futures fell 76 cents, or 1.0%, to settle at $74.39 a barrel, while U.S. West Texas Intermediate (WTI) crude fell 38 cents, or 0.5%, to settle at $71.29.
The Omicron variant, reported in more than 60 countries, poses a "very high" global risk, with some evidence that it evades vaccine protection, according to the World Health Organization.
Reference: CNBC, Reuters
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