Gold up, stops skid toward $1,800 as weak U.S. data hits Wall Street
· Gold rose on Wednesday as an unexpected rise in U.S. jobless claims slammed the brakes on the previous day’s rally on Wall Street, and the precious metal bounced off a sharp slide toward $1,800 in prior sessions.
· Spot gold rose 0.2% to $1,810.41 an ounce, a day after hitting its lowest since July 17 at $1,800.01. U.S. gold futures gained $0.9 at $1,805.5
· The S&P 500 and the Dow retreated on signs of a slowdown in the labor market recovery. On Tuesday, Wall Street rallied to a record as progress on vaccines and a smooth White House transition bolstered bets on a swifter economic rebound.
· The jobless data is supportive for gold “just on notions that we’ve still got a very dark period ahead before we get through this pandemic,” Kitco Metals senior analyst Jim Wyckoff said.
· A subdued dollar also spurred gold by making it cheaper for those holding other currencies.
· The dollar’s slide “along with the technical support (for gold near $1,800), convinced some people to maybe stop selling and acquire some more positions,” said Bart Melek, head of commodity strategies at TD Securities.
“The next six months are going to be very difficult; we’re going to experience significantly below potential growth, and governments and central banks will have to significantly add to stimulus to make sure we don’t get the second wave transform into a long period of economic underperformance,” Melek added.
· Lower interest rates reduce the opportunity cost of holding non-yielding bullion, which has risen over 19% this year benefiting from its status as a hedge against inflation and currency debasement.
· The focus next is on minutes of the U.S. Federal Reserve’s last meeting, due at 1900 GMT.
· Silver was up 0.5% at $23.37 an ounce, platinum edged up 0.6% to $966.59 and palladium was down 0.5% at $2,336.97.
· Fed weighed adjusting bond purchases to provide more help to economy ‘fairly soon,’ minutes show
Federal Reserve officials indicated at their last meeting that adjustments could be made soon to their bond-buying program as the central bank looks to alternate ways it can support the economy.
The Fed on Wednesday released minutes from its Nov. 4-5 policy meeting. Officials at that gathering voted to keep benchmark short-term borrowing rates anchored near zero.
Market participants were looking to the minutes to gauge where policymakers stand on possibly ramping up or adjusting the asset purchase program, which currently has the Fed buying $120 billion of Treasurys and mortgage-backed securities a month. The central bank could choose to increase the purchases or to lengthen the duration of those bonds.
· U.S. weekly jobless claims rise as COVID-19 infections surge
The number of Americans filing first-time claims for jobless benefits increased further last week, suggesting that an explosion in new COVID-19 infections and business restrictions were boosting layoffs and undermining the labor market recovery.
Initial claims for state unemployment benefits increased 30,000 to a seasonally adjusted 778,000 for the week ended Nov. 21, the Labor Department said on Wednesday. It was the second straight weekly increase in claims. Economists polled by Reuters had forecast 730,000 applications in the latest week.
The weekly claims report, the most timely data on the economy’s health, was published a day early because of Thursday’s Thanksgiving Day holiday.
· U.S. core capital goods orders beat expectations in October
New orders for key U.S.-made capital goods increased more than expected in October, but momentum is slowing in line with expectations for slower economic growth in the fourth quarter.
Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, rose 0.7% last month. These so-called core capital goods orders surged 1.9% in September.
· Home prices see biggest spike in 6 years in September, according to S&P Case Shiller
Covid-induced demand from homebuyers over the summer caused an exceptionally strong spike in home prices.
Values jumped 7% annually in September, up from a 5.8% annual gain in August, according to the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index. That is the largest annual gain since September 2014. Prices are now nearly 23% higher than their last peak in 2006.
· World agonises over new COVID curbs as infections approach 60 million
Countries around the world agonised over new coronavirus curbs ahead of Christmas and other holidays as global infections approached 60 million on Wednesday and U.S. officials pleaded with Americans to stay home over Thanksgiving.
CORONAVIRUS UPDATES:
Global cases: 60,704,195
Global deaths: 1,425,862
U.S. cases: 13,137,829 (+180,770)
U.S. deaths: 268,216 (+2,299)
· Covid cases are exploding across U.S. and Thanksgiving could be an ‘accelerator event’
· New York Gov. Cuomo says ‘states are broke’ and need federal funding to distribute Covid vaccine
· FDA clears a ‘new generation’ of Covid antibody test designed to tell how well someone is protected against the virus
· Germany extends anti-virus measures as deaths reach record
· ECB warns bank profits will ‘remain weak’ throughout next year
European banks will not see profits return to pre-pandemic levels before 2022, the region’s central bank warned Wednesday in its latest financial stability review.
The banking system is seen as a key element to support the economic recovery in the wake of the pandemic. Many businesses will be looking for new funding to rebuild their work after months of being on stand-by.
· Irish PM says 'good result' in UK trade talks possible, EU chief says ready for no-deal
· China's Xi congratulates Biden on U.S. election victor
· France orders tech giants to pay digital tax
The French Finance Ministry has sent out notices to big tech companies liable for its digital service tax to pay the levy as planned in December, the ministry said on Wednesday.
The ministry had hoped to raise about 500 million euros this year from the tax, but the 2021 budget bill puts the figure at 400 million.
· Biden will struggle to cut defense spending despite pressure
· Biden team meets with former U.S. media agency leaders, including some ousted by Trump appointee
· Biden’s ‘America is back’ is good news for Germany
President-elect Joe Biden’s signaling of a shift in America’s foreign policy objectives is welcome news in Berlin, where German officials have fretted over tariffs for the last four years.
· A Biden administration wants the Iran nuclear deal back. That could be much harder and riskier now
“No matter how desperate a Biden administration may be for a deal, it will be Iran’s response that will matter more,” one Iran expert told CNBC.
Iran’s economy has contracted on average 6% each year since President Trump unilaterally withdrew from the multi-country deal.
Reference: CNBC, Reuters, Worldometers
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