Gold set for worst month in nearly 4 years on dollar bounce-back
· Gold edged down on Wednesday, as a chaotic first U.S. presidential debate drove investors to the safety of the dollar and raised concerns over the next stimulus bill, leading the metal towards its worst month in nearly four years.
· Spot gold was 0.3% lower at $1,892.33 per ounce and down about 4% in September, on track for its worst monthly performance since Nov. 2016. U.S. gold futures settled down 0.4% at $1,895.50.
· “It seems like after last night’s debate, a wedge might have formed between the two parties again and a possibility for any kind of stimulus may have diminished,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.
“Whenever the dollar index rallies, we see a deflationary environment and that weighs on not only the prices of gold but also silver and a lot of other commodities,” Streible added.
· The first U.S. presidential debate between President Donald Trump and Democratic rival Joe Biden turned investors cautious and drove them to seek refuge in the dollar, reducing gold’s appeal for other currency holders.
· The dollar index was set for its best month since July 2019.
· Despite the recent pullback, most analysts see an upward trajectory for gold in the medium to long term. The metal is on track for its eighth straight quarterly gain.
· “The good thing for gold is, with more uncertainty, more people want to own gold, and in addition to that, it looks like some of the policies may continue, like the low and negative interest rates across the globe,” Michael Matousek, head trader at U.S. Global Investors said.
· UBS sees gold hitting $2,000 per ounce by end-2020
· Silver fell 3% to $23.55 per ounce and platinum rose 1.3% to $895.99.
· Silver was on track for its worst month since September 2011, down about 17% so far this month, while platinum was set for its biggest fall since March, declining over 3%.
· Palladium was steady at $2,309.20.
· Companies added better than expected 749,000 jobs amid jump in construction, hospitality, ADP says
U.S. economic data was also for the most part dollar-supportive. U.S. private employers stepped up hiring in September, with private payrolls increasing by 749,000 jobs this month, the ADP National Employment Report showed on Wednesday. Data for August was revised up to show 481,000 jobs added instead of the 428,000 initially reported.
Andrew Hunter, senior U.S. economist at Capital Economics, however, said despite job gains, employment was still more than 10 million jobs below its pre-pandemic level. “A full labor market recovery remains a long way off,” he noted.
· U.S. economy plunges 31.4% in the second quarter but a big rebound is expected
Data also showed that U.S. gross domestic product plunged at a 31.4% annualized rate in the second quarter, the deepest drop in output since the government started keeping records in 1947, based on the Commerce Department’s third estimate of GDP.
· U.S. pending home sales race to record high in August
Contracts to buy U.S. previously owned homes surged to a record high in August, suggesting housing market activity was gathering speed amid record-low mortgage rates.
The National Association of Realtors said on Wednesday its Pending Home Sales Index, based on contracts signed last month, jumped 8.8% to an all-time high of 132.8 last month. Economists polled by Reuters had forecast pending home contracts, which become sales after a month or two, rising 3.4% in August.
· House delays vote on $2.2 trillion coronavirus stimulus bill to allow more time for talks
House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin failed to strike a coronavirus stimulus deal during a more than 90-minute meeting Wednesday.
The pair will continue discussions as they try to craft an elusive fifth relief package that could pass both chambers of Congress, the California Democrat said in a statement. House Democrats initially aimed to pass their roughly $2.2 trillion rescue legislation Wednesday night, but called off the vote until at least Thursday to allow more time for bipartisan talks.
Approving the bill would be a largely symbolic action as Senate Majority Leader Mitch McConnell has already opposed it.
· Mnuchin says he will give stimulus talks ‘one more serious try’
Treasury Secretary Steven Mnuchin plans to give coronavirus stimulus talks with Democrats “one more serious try.”
· Senate passes spending bill to prevent government shutdown, sends it to Trump
· Fed’s Daly calls for more fiscal help to get the economy out of a ‘big ditch’
The U.S. economy needs more help from the fiscal side to recover from the ongoing impact of the coronavirus pandemic, San Francisco Federal Reserve President Mary Daly said Wednesday.
· Near-zero interest rates may be needed for up to 3 years, says Dallas Fed’s Robert Kaplan
Dallas Fed President Robert Kaplan told CNBC on Wednesday that it is likely appropriate to keep interest rates anchored near zero for up to three years to aid the U.S. economic recovery from the coronavirus pandemic.
· Fed's Bowman sees bumpy recovery, warns on asset prices
The U.S. economy “has been recovering at a rapid pace” from the coronavirus recession, Federal Reserve Governor Michelle Bowman said on Wednesday, but unemployment remains quite high and further monetary and targeted fiscal support likely will be needed.
· CORONAVIRUS UPDATES:
Global cases: More than 34.147 million
Global deaths: At least 1.018
U.S. cases: More than 7.44 million
U.S. deaths: At least 211,738
France's new COVID-19 cases above the 10,000 threshold again
· Moderna doesn’t expect a vaccine before the U.S. election, CEO says
Moderna doesn’t expect to apply for an emergency use authorization with the Food and Drug Administration for its potential Covid-19 vaccine until after the U.S. presidential election on Nov. 3, CEO Stephane Bancel told the Financial Times.
The biotech firm also does not expect to have full FDA approval to distribute the vaccine to all Americans until next spring, he told the FT.
Moderna is a frontrunner in the race for a Covid-19 vaccine, next to Pfizer. Bancel’s prediction for when Moderna’s vaccine will be available may be at odds with President Donald Trump, who has said a vaccine could be ready to distribute as early as October with enough vaccine doses for all Americans by April.
· Next Trump-Biden debate rules to change, with a possible mic mute, after an ugly first round
The group that sponsors the presidential debates said Wednesday that it will make format changes to the next two showdowns between President Donald Trump and Democratic challenger Joe Biden “to maintain order” in light of their fractious first showdown.
A source close to the Commission on Presidential Debates told NBC News that no final decisions have been made on the changes. But the source also said that the group is considering cutting off a candidate’s microphone if they violate the rules.
· Biden and Trump agreed on at least one thing in debate: Support for electric vehicles
Reference: CNBC, Reuters
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