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Gold held in a tight range on Wednesday as investors looked forward to U.S. inflation data that could shape the course of the Federal Reserve’s monetary policy.

·         Spot gold was down 0.1% at $1,891.05 per ounce by 1:44 p.m EDT (1744 GMT).

 

·         U.S. gold futures settled 0.1% up at $1,895.50.

 

·         SPDR GOLD HOLDINGS:

·         The underlying fundamentals remain favorable for precious metals as the Fed seems to be “stubbornly” holding on to the idea that current inflationary trends are transitory and thus is likely to keep monetary policy loose for the time being, said David Meger, director of metals trading at High Ridge Futures.

 

While there could be a knee-jerk market reaction if inflation runs “hotter than expected,” the Fed would likely stick to its view that any jump is temporary, Meger added.

·         Traders will scan Thursday’s U.S. consumer price index report for any signs the Fed could begin to step back from its ultra-loose monetary policy. Market participants are also awaiting a European Central Bank meeting on the same day.

 

·         “The one major element that favors the Fed’s notion that inflation is going to be transitory, is that from a historical basis, treasury yields are nowhere suggesting inflationary pressures,” said Kitco Metals senior analyst Jim Wyckoff.

 

Wyckoff added, however, that surging raw-material prices were indicative of an inflationary trend, also supportive of gold.

 

·         Gold is considered a hedge against inflation likely spurred by large stimulus from central banks and governments around the world.

 

·         But gold prices are increasingly vulnerable to a near-term pullback as speculative flows are now slowing alongside physical flows amid India’s battle against COVID-19 and waning Chinese demand, TD Securities wrote in a note.

 

·         Silver rose 0.8% to $27.86 per ounce.

 

·         Palladium eased 1.2% to $2,773.94.

 

·         Platinum slipped 1.2% to $1,148.07.

 

·         Hot inflation may have become scorching in May and is expected to hit a 28-year high

- Economists expect core consumer inflation, excluding food and energy, jumped 3.5%, the highest level since 1993.

- The consumer price index is reported at 8:30 a.m. ET Thursday, and is expected to show headline inflation rose a sizzling 4.7%, the fastest pace since 2008.

- Investors are watching the data to see if it looks like inflation could be hotter and more persistent than the Fed expects it to be.

 

·         ‘Impotent’ Fed policy will fail to contain 1970s-type inflation, investor Peter Boockvar predicts

·         U.S. Fed's reverse repo volume surges to record half a trillion dollars

The Federal Reserve's reverse repurchase window on Wednesday took in $503 billion in cash, hitting a record peak for a third consecutive session, as financial institutions flush with liquidity flocked to the Fed facility to park their cash and secure Treasury collateral.

·         U.S. senators push for infrastructure plan that avoids tax hikes

A bipartisan group of 10 senators is trying to craft a plan to revitalize U.S. roads and bridges without tax hikes, lawmakers said on Wednesday, though some of President Joe Biden's fellow Democrats fretted that such an approach on infrastructure legislation would fail.

Revamping America's infrastructure is a high priority for Biden, but his sweeping $1.7 trillion proposal has run into trouble in a Congress that his party only narrowly controls, making Republican support pivotal.

Republican Senator Mitt Romney told reporters that members of the group have reached "tentative conclusions" on their plan but did not provide details. The proposal is expected to total nearly $900 billion.

 

·         U.S. Senate passes sweeping bill to address China tech threat

The measure authorizes about $190 billion for provisions to strengthen U.S. technology and research - and would separately approve spending $54 billion to increase U.S. production and research into semiconductors and telecommunications equipment, including $2 billion dedicated to chips used by automakers that have seen massive shortages and made significant production cuts.

China's parliament expressed "strong indignation and resolute opposition" to the bill. It said in a statement that the U.S. bill showed "paranoid delusion of wanting to be the only winner" and had distorted the original spirit of innovation and competition.

 

·         Biden plan would raise taxes by $213,000 next year on top 1%, analysis finds

The top 1% would see their federal taxes rise by more than $213,000, on average, next year as a result of President Joe Biden’s tax plan, according to an analysis published Wednesday by the Urban-Brookings Tax Policy Center.

Such households, which earn about $800,000 or more a year, would see their after-tax income fall about 11% as a result, according to the report.

 

·         Democrats circulate draft antitrust bills that could reshape Apple, Amazon, Facebook and Google

 

·         Biden begins European visit with a warning for Russia

President Joe Biden on Wednesday began his first trip abroad since taking office by hailing America’s unwavering commitment to the NATO alliance and warning Russia it faced “robust and meaningful” consequences if it engaged in harmful activities.

 

·         Biden and Johnson to agree on new ‘Atlantic Charter’ covering tech, trade and travel

The U.S. and U.K. have pledged to agree on a new “Atlantic Charter” to cement trade, travel and tech ties between the two nations.

U.K. Prime Minister Boris Johnson and President Joe Biden will meet Thursday ahead of the Group of Seven (G-7) summit that begins Friday in Cornwall, in southwest England.

 

·         U.S., UK leaders expected to work to reopen travel -UK statement

 

·         U.S. Chamber group urges quick U.S., EU action to end tariffs, adopt privacy shield

 

·         The EU is planning to end U.S. tariff battle with Biden due in Brussels next week

The European Union wants the United States to commit to end their aircraft-related tariffs next week, according to a draft statement seen by CNBC, as both sides look to get the transatlantic relationship back on track.

The EU is also hoping that President Joe Biden, who is due in Brussels for a summit early next week, will vow to end steel and aluminum duties before December this year, according to the document from the EU.

The European Council, the institution hosting the summit, is responsible for preparing the joint statement that the leaders will look to greenlight. Bloomberg first reported the news.

 

·         Chinese factories worried about profits face a record gap between rising production costs and selling prices

Chinese factories are facing the largest gap on record between the speed at which producer prices and consumer prices are climbing.

Selling prices to private consumers are holding fairly steady, while production costs are soaring. That cuts into how much money manufacturers can make.

China’s producer price index rose 9% in May from a year ago — the fastest since 2008 — as commodity prices surged, while the consumer price index climbed 1.3%, the National Bureau of Statistics said Wednesday.

The difference between the two reached 7.7 percentage points, the highest on record, surpassing the previous peak of 7 percentage points in 2017.

 

·         Oil steadies amid weak summer kickoff for U.S. fuel demand

Oil prices were steady on Wednesday after U.S. inventory data showed a surge in gasoline inventories due to weak fuel demand following U.S. Memorial Day weekend, traditionally the beginning of the peak summer driving season.

Brent crude futures remained unchanged to settle at $72.22 a barrel, having earlier touched $72.83, their highest since May 20, 2019.

U.S. West Texas Intermediate (WTI) crude closed 9 cents, or 0.1%, lower at $69.96 a barrel, after reaching $70.62, its highest since Oct. 17, 2018.

·         CORONAVIRUS UPDATES:

·         U.S. administers 304.8 mln doses of COVID-19 vaccines – CDC

 

·         U.S. is in discussions with Moderna on buying Covid vaccine doses for other nations

 

The U.S. government is in negotiations with Moderna to potentially secure additional Covid-19 vaccine doses to supply to the world, according to a person familiar.

 

Reference: CNBC, Reuters, Worldometers