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old breaks below $1,800 as dollar, yields gain

Gold dropped more than 2% on Thursday to break below the key psychological $1,800 level as a rising dollar and U.S. Treasury yields eroded bullion’s appeal.

Spot gold fell 2.3% to $1,791.76 per ounce by 1:43 p.m. EST (1843 GMT), after touching a more than two-month low of $1,784.76. U.S. gold futures settled down 2.4% at $1,791.20.

·         Silver dropped 2.3% to $26.26.

Silver prices have declined more than 13% since a GameStop-style retail frenzy sent them to their highest in nearly eight years at $30.03 on Monday.

·         The steepening of the yield curve “ultimately means the cost of holding gold across the curve is increasing. Gold could go even lower and consolidate in response to ... the whole idea that the U.S. and global economy are recovering,” said Bart Melek, head of commodity strategies at TD Securities.

However, silver could benefit from industrial demand, Melek added.

·         Allaying some concerns over the health of the economy was a drop in Americans filing new applications for unemployment benefits last week.

·         Making bullion more expensive for holders of other currencies, the dollar scaled a more than two-month peak while longer-term U.S. Treasury yields rose on anticipation of a large pandemic relief package from Washington and a stabilizing U.S. labor market.

While gold usually gains from more stimulus, since it is considered a hedge against inflation from widespread stimulus measures, higher yields challenge that status because they increase the opportunity cost of holding non-yielding bullion.

·         “Growing expectations about a relatively quick end to the pandemic are raising economic recovery hopes and with it the likelihood of central banks reducing the current hyper-dovish monetary stimulus,” ActivTrades chief analyst Carlo Alberto De Casa said in a note.

·         Among other precious metals, platinum fell 0.7% to $1,093.52 per ounce and palladium rose 0.5% to $2,286.18.

·         U.S. Senate Democrats push ahead on road to new COVID-19 relief

The U.S. Senate, in the throes of a marathon debate over the shape of President Joe Biden’s $1.9 trillion coronavirus aid plan, voted overwhelmingly on Thursday to exclude upper-income Americans from a new round of direct payments to help stimulate the economy.

By a vote of 99-1, the Senate approved an amendment recommending that high-income earners not qualify for a new round of government checks that could amount to $1,400 for individuals. Republican Senator Rand Paul was the lone dissenter.

Details of the income cap would still have to be worked out in subsequent legislation.

 

·         U.S. Treasury, regulators hail resilience of market infrastructure; reviews under way

 

·         Yellen seeks to 'understand deeply' GameStop frenzy as market regulators meet

 

·         CORONAVIRUS UPDATES:

Global Cases: 105.39 (+498,789)
Global Deaths: 2.29M (+14,118)

 

No. 1

U.S. Cases: 27.26M (+116,752)
U.S. Deaths: 466,845(+3,380)

 

No. 115

Thailand Cases: 22,058 (+809)

Thailand Deaths: 79

·         China reports fewest daily COVID-19 cases in over a month

 

·         New Covid strains ‘may even escape the immune response,’ says Biden Covid advisor

A member of the Biden-Harris Transition Covid Advisory Board warned about the highly transmissible new Covid variants and vaccine resistance during a Thursday evening interview on CNBC’s “The News with Shepard Smith.”

 

·         Johnson & Johnson requests emergency authorization from FDA for Covid vaccine

 

·         UK launches ‘world first’ trial mixing different Covid vaccines for first and second doses

 

·         Dubai rejects ‘superspreader’ label as restrictions tighten and countries lay blame

 

 

·         Jobless claims better than expected last week and lowest in two months

New claims for jobless benefits came in a bit less than expected last week though U.S. employment gains remain sluggish.

First-time claims for unemployment insurance totaled 779,000 for the week ended Jan. 30, the Labor Department reported Thursday. That was below the 830,000 estimate from economists surveyed by Dow Jones.

The reading was the lowest since Nov. 28 as the U.S. economy continues its slow recovery from the Covid-19 pandemic.

The total represented a drop of 33,000 from the previous week’s downwardly revised count of 812,000.

 

·         Jobs growth likely rebounded in January, but the extent of the recovery depends on hotels and restaurants

 

·         Federal Reserve's George says too soon to discuss tapering bond buying: Bloomberg

Federal Reserve Bank of Kansas City President Esther George told Bloomberg News it was too soon to discuss scaling back the central bank’s massive bond-buying program and the Fed was still “far away” from achieving its goals.

 

·         Mester: Fed not interest in pursuing negative rates

The Bank of England said Thursday British banks will need at least six months to prepare for a shift into negative interest rates. Cleveland Fed President Loretta Mester joined CNBC’s Steve Liesman to discuss.

Fed’s Mester doesn’t see policy changes coming from GameStop saga

 

·         Bank of England says banks will need six months to prepare for negative rates

 

·         U.S. court upholds Trump's national security tariffs on steel imports

The U.S. Court of International Trade upheld former President Donald Trump’s “Section 232” U.S. national security tariffs on steel imports on Thursday, denying a steel importer’s challenge to the duties.

A three judge panel at the New York-based federal court, which hears challenges to trade actions under U.S. laws, found that the Commerce Department and Trump properly applied a Cold War-era trade law in imposing the tariffs.

Trump imposed 25% tariffs on imported steel and 10% on imported aluminum from most countries in 2018, arguing that these protections were necessary for U.S. national security to maintain healthy domestic production.

 

·         Biden vows to restore U.S. alliances and lead with diplomacy in his first foreign policy address

 

·         Biden says U.S. will not hesitate to raise the cost on Russia, calls for Navalny’s immediate release

 

·         U.S. considering targeted sanctions after Myanmar coup: Sullivan

The Biden administration is considering an executive order in response to the military takeover in Myanmar and potentially targeted sanctions on individuals and military-controlled entities, national security adviser Jake Sullivan said on Thursday.

Sullivan said there was bipartisan support on Myanmar, and the administration believed it could work with Congress “on a package of sanctions to impose consequences in response to this coup.”

 

·         IMF says members to guide decision on whether to recognize Myanmar's military leaders

The International Monetary Fund will be “guided by our membership” in deciding whether to recognize the military regime that has seized power in Myanmar as the country’s legitimate government, IMF spokesman Gerry Rice said on Thursday.

·         China says U.S. 'creating tensions' after warship sails near Taiwan

The United States is deliberately “creating tensions” and disrupting peace and stability, China’s military said, after a U.S. warship sailed through the sensitive Taiwan Strait, the first such mission under the new Biden administration.

China, which claims democratically run Taiwan as its own territory, has been angered by increased U.S. support for the island, including arms sales and sending warships through the Taiwan Strait, further souring Beijing-Washington relations.

 

Reference: CNBC, Reuters, Worldometers