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·         Gold prices more than halved their session gains on Friday after U.S. Federal Reserve Chair Jerome Powell said he expected inflation to ease next year and that the U.S. central bank was on track to begin winding down its stimulus.

 

·         Spot gold was up 0.6% at $1,793.82 per ounce by 1:41 p.m. ET (1741 GMT), after rising as much as 1.7% earlier in the session. Prices have risen 1.4% for the week.

 

·         U.S. gold futures settled up 0.8% at $1,795.80 per ounce.

 

·         While gold is often considered an inflation hedge, reduced stimulus and interest rate hikes push government bond yields up, raising the opportunity cost of holding non-yielding bullion.

 

·         Euro zone inflation expectations hit their highest levels in years, putting additional pressure on the European Central Bank and its insistence on maintaining crisis-era stimulus.

 

·         Silver rose 0.8% to $24.34 per ounce.

 

·         Platinum fell 0.7% to $1,041.52 and palladium rose 0.6% to $2,029.18 per ounce.

 

·         Dollar pares losses as Powell signals bond taper

The dollar pared losses on Friday after Federal Reserve Chairman Jerome Powell said the U.S. central bank should begin reducing its asset purchases soon, but should not yet raise interest rates.

Investors have taken profits since the dollar index hit a one-year high last week, when concerns that inflation will remain stubbornly high for longer led investors to bring forward expectations on when the Fed will first raise rates to mid-2022.

The Fed said at its September meeting that it will likely begin reducing its monthly bond purchases as soon as November, and signaled interest rate increases may follow more quickly than expected. read more

The dollar index fell 0.10% to 93.64, and is down from a one-year high of 94.56 last week. The euro gained 0.09% to $1.1636.

Data on Friday showed that U.S. business activity increased solidly in October, suggesting economic growth picked up at the start of the fourth quarter as COVID-19 infections subsided, though labor and raw material shortages held back manufacturing.

 

·         U.S. long-dated yields slip but inflation still in focus

Yields on longer-dated U.S.

Treasuries slid on Friday after the benchmark 10-year note

breached 1.7% overnight, while key market gauges of rising consumer prices kept pressing higher on concerns about inflation.

 

The yield on 10-year Treasury notes was down 1.6

basis points to 1.659% after rising to a five-month high of

1.7064% late Thursday. The five-year, U.S. break-even inflation rate breached 3% in early trading, then slid.

 

·         U.S. business activity accelerates in October, shortages hamper factories - IHS Markit survey

U.S. business activity increased solidly in October, suggesting economic growth picked up at the start of the fourth quarter as COVID-19 infections subsided, though labor and raw material shortages held back manufacturing.

Data firm IHS Markit said on Friday its flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, rebounded to a reading of 57.3 in the first half of this month from 55.0 in September. A reading above 50 indicates growth in the private sector.

The pick up in business activity this month was driven by the services sector. The IHS Markit survey's flash services sector PMI rebounded to a reading of 58.2 from 54.9 in September. Economists polled by Reuters had forecast a reading of 55.1 this month for the services sector, which accounts for more than two-thirds of U.S. economic activity.

 

·         Yellen says U.S. is not losing control of inflation

U.S. Treasury Secretary Janet Yellen said on Sunday that the United States was not losing control of inflation, and that she expected inflation levels to return to normal by the second half of next year.

Yellen, in an interview on CNN, said spending in President Joe Biden’s domestic infrastructure and Build Back Better packages would be allocated over the next 10 years, but she did not say whether that would exacerbate inflation.

 

·         U.S. envoy urges N.Korea to end 'provocations', accept offer of talks

North Korea's recent ballistic missile tests here were "concerning and counterproductive" for efforts to reduce tensions, and Pyongyang should instead engage in talks, the U.S. envoy for North Korea said on Sunday.

Speaking to reporters after meeting with his South Korean counterpart in Seoul, Special Representative Sung Kim here said the United States is committed to exploring "sustained and substantive diplomacy" with North Korea.

 

·         India seeks compensation for climate damages caused by developed nations

The broad idea is that, based on historical contributions to global greenhouse gases, countries will provide compensation for the damages that pollution will one day cause.

 

 

Reference: CNBC, Reuters, Worldometers