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Gold loses ground as dollar firms; investors eye U.S. stimulus

· Gold prices on Monday retreated from an all-time high hit in the last session as the dollar hovered near a one-week peak, while investors awaited an agreement on a U.S. relief bill to help the pandemic-hit economy.

· Spot gold fell 0.2% to $2,030.26 per ounce, having hit a record high of $2,072.50 on Friday. U.S. gold futures settled up 0.6% at $2,039.70.

· “This is just a natural pullback in this uptrend, people are just taking profits because gold has had such a fast move upwards and the dollar has been up for the past two days,” said Michael Matousek, head trader at U.S. Global Investors.

“But the move in dollar is minimal, which tells you that there’s not much conviction in the dollar getting higher and that’s why this pullback in gold should be shallow.”

· The dollar held near a one-week peak as investors focus on the U.S. aid package and U.S.-China meeting on Aug. 15, as tensions mount between the world’s two largest economies.

· Gold got a slight lift earlier after U.S. Treasury Secretary Steven Mnuchin said an agreement could be reached on a relief bill this week, but the metal erased gains after he declined to say when talks could resume.

· “The governments around the world are not going to stop printing money to fight COVID in the short term and gold will benefit from that. Gold’s next target is $2,090 per ounce,” said Bob Haberkorn, senior market strategist at RJO Futures.

· Bullion has surged 34% this year amid mounting COVID-19 cases, which have battered global economies and prompted unprecedented stimulus measures.

· Silver jumped as much as 3.9% and was last up 3.2% at $29.20 per ounce, platinum rose 2.8% to $988.53, after hitting its highest level since Feb. 20 at $1,002.25.

· Palladium climbed 2.7% to $2,234.59.

· Global cases top 20 million; Mnuchin says relief deal could come this week

More than 20 million cases of coronavirus reported in the world

There are at least 20 million cases of Covid-19 around the world as of Monday night, data compiled by Johns Hopkins University showed. The United States is the worst-hit country in the world, with at least 5.08 million cases and 163,400 deaths.

The coronavirus, which was first reported in the Chinese central city of Wuhan late last year, has killed at least 733,929 around the world and ravaged the global economy.

· Mnuchin says White House is willing to offer more money in virus aid talks

· U.S. coronavirus aid talks stalled, as parties trade jibes

U.S. congressional leaders and Trump administration officials said on Monday they were ready to resume negotiations on a coronavirus aid deal, but talks remained deadlocked as Democrats said Republicans needed to meet them in the middle.

After a bid by President Donald Trump at the weekend to sidestep Congress, it was unclear whether Democrats and Republicans would be able to bridge their differences to provide relief to workers, businesses and local governments devastated by a pandemic that has killed at least 162,000 Americans.

· The Fed bought more blue-chip and junk bonds, and has started making Main Street loans

The Federal Reserve in July bought up more bonds from blue-chip companies including Microsoft and Coca-Cola, while it added to its positions in junk debt and made its biggest Main Street loan to a ski resort and casino in the Pocono Mountains.

In its latest report to Congress on the myriad lending and liquidity programs implemented during the coronavirus pandemic, the Fed detailed a slew of new bond purchases as well as the first tepid steps in its much-touted loan program geared to small- and medium-sized businesses.

Though the Main Street initiative has the capacity for $600 billion in loans, the first month saw just 13 companies gain approval, with a total value of just over $92 million. That has come amid criticism that the standards are unattractive to both borrowers and lenders, despite the Fed reporting that it formulated the program after feedback from thousands of sources.

The biggest of the loans went to Mount Airy Casino Resort, which borrowed $50 million. The smallest of the loans was for $1.5 million and went to the Pablo Alfaro Group, a broker in residential and commercial properties based in Miami Beach, Florida.

· Fed's Evans says vulnerable workers affected by crisis face highly uncertain future

The economic crisis caused by the coronavirus pandemic is falling hardest on the most vulnerable workers, and policymakers need to coordinate to come up with creative policies to help people make it through the uniquely painful downturn, Chicago Federal Reserve Bank President Charles Evans said on Monday.

· COVID-19 cases in U.S. children soared in late July, report says

The number of new COVID-19 cases among children in the United States rose 40% in the last two weeks of July, according to a report released just weeks before tens of millions of American students are scheduled to begin the new school year.

Health experts are keeping an eye on coronavirus infections among kids and teenagers as officials struggle with the thorny question of whether to reopen schools for in-person classes, adopt a virtual learning model or a hybrid of the two.

· German firms expect coronavirus restrictions to last until April

German businesses expect coronavirus restrictions on public life to continue for another 8.5 months on average, according to the closely-followed Ifo institute, as the rising number of coronavirus infections in Germany prompts concern.

Ifo’s last business survey in July asked different sectors how long they expect restrictions on public life to last, with service providers expecting restrictions to last 8.9 months, trade-oriented businesses expecting 8.6 months, construction 8.2 months, and manufacturing 7.8 months.

The survey comes as Europe’s businesses look to recover from the coronavirus pandemic amid concerns over a rising number of infections in a number of countries in the region, including Germany.

It warned that the increase in the number of reported Covid-19 cases over the past few weeks was “very concerning.” A further 5,271 new cases were reported in the last seven days, the RKI said Sunday.

“The number of new cases reported daily has been increasing since calendar week 30. This development is very concerning and will continue to be monitored very closely by the RKI. A further worsening of the situation must be avoided,” the RKI noted.

Economists at Deutsche Bank said Monday that the increase in Covid-19 infection rates in Germany and elsewhere “is a concern, although not yet alarming.”

“For seasonal reasons we expect elevated rates until spring 2021. We assume that a vaccine will be widely available by mid-2021, generating a confidence boost for the back part of that year,” economists led by Stefan Schneider said in a note.

Deutsche Bank’s economists now expect German GDP (gross domestic product) to contract by 6.4% in 2020 (compared with -9% predicted in early May) followed by a 4% increase in 2021. Still, the pre-Covid output level will not be reached before mid-2022, they predicted, adding that the margin for error is high.

· Singapore’s economy contracted 13.2% on-year in the second quarter — worse than advance estimates

Singapore’s economy contracted by 42.9% in the second quarter of 2020 compared to the previous quarter — sending the Southeast Asian country into a technical recession, the Ministry of Trade and Industry said on Tuesday.

The latest update on Singapore’s gross domestic product was worse than the official advance estimate released last month. The estimate, computed largely from data in April and May, had shown the economy shrinking by 41.2% in the second quarter compared to the prior three months.

On a year-on-year basis, the economy shrank by 13.2% in the quarter ended June 30, according to the ministry. That’s worse than the earlier estimate of a 12.6% year-over-year contraction.

The ministry revised its full-year forecast for Singapore to register an economic contraction of between 5% and 7% in 2020.

· Iran nuclear deal at risk as U.N. council prepares to vote on arms embargo

The U.N. Security Council is preparing to vote this week on a U.S. proposal to extend an arms embargo on Iran, a move that some diplomats say is bound to fail and put the fate of a nuclear deal between Tehran and world powers further at risk.

A last-minute attempt by Britain, France and Germany to broker a compromise with Russia and China on an arms embargo extension appeared unsuccessful so far, diplomats said. Russia and China, allies of Iran, have long-signaled opposition to the U.S. measure.

U.S. Ambassador to the United Nations Kelly Craft said Russia and China wanted to benefit from the end of the arms embargo.