Gold edged lower on Monday as investors turned cautious in the run-up to a Federal Reserve policy meeting, overshadowing some support from a weaker dollar.
· Spot gold was down 0.2% at $1,798.41 per ounce by 1:56 p.m. ET.
· U.S. gold futures settled 0.1% lower at $1,799.20.
· SPDR GOLD HOLDINGS:
· The U.S. central bank will begin its two-day policy meeting on Tuesday.
· “The concern now is that we will get the first hints of not necessarily a rate increase but what kind of reductions the Fed envisions to its balance sheet, and that could be a trigger for rates to move higher,” said Edward Meir, analyst with ED&F Man Capital Markets.
Meir, however, said that was unlikely to drive a sustained fall in gold, with the metal drawing support from a dovish European Central Bank, a currently accommodative Fed, large fiscal stimulus and higher inflation.
Both the ECB and Fed have suggested they will keep monetary policy accommodative for some time.
· Yet Han Tan, market analyst at Exinity Group, said that if the policy-setting Federal Open Market Committee provides more details about tapering plans, gold could test the June lows of $1,750-$1,770.
· Bullion’s dip came despite a weaker dollar and a slight dip in benchmark U.S. Treasury yields.
· Elsewhere, silver rose 0.2% to $25.22 an ounce.
· “You might have to wait for a bit for a breakout in silver, said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.
“Silver relies a lot on infrastructure and the slowdown in China might impact the technology that silver demands in order to be consumed.”
· Floods in central China, especially in the industrial and transport hub city of Zhengzhou, have raised concerns over damage to the region’s infrastructure.
· Among other metals, platinum gained 0.8% to $1,070.11 an ounce and palladium was slightly up at $2,672.98.
· Dollar edges lower with Fed in focus, cryptocurrencies jump
The dollar edged lower on Monday against a basket of peer currencies as investors positioned themselves ahead of this week’s U.S. Federal Reserve policy meeting, while cryptocurrency prices rose to their highest in weeks.
The dollar index was down 0.261% at 92.654 at 3:00 p.m. ET, under pressure from the euro and yen, but was still close to last week’s 3-1/2-month high of 93.194.
The euro ticked 0.27% higher to $1.1800, even after a survey from the Ifo Institute showed German business morale fell unexpectedly in July on continuing supply chain worries and rising COVID-19 infections.
The yen gained as much as 0.4% to 110.11 yen per dollar. Sterling gained against the dollar and the euro as coronavirus infections in Britain receded.
The greenback is still up nearly 4% since May 25 as an improving U.S. economy bolstered the outlook for the Fed to start paring asset purchases as early as this year.
· Bitcoin briefly tops $40,000 for first time since June as cryptocurrency rallies after sell-off
· U.S. new home sales hit 14-month low amid supply constraints
New home sales fell 6.6% to a seasonally adjusted annual rate of 676,000 units last month, the lowest level since April 2020, the Commerce Department said on Monday. May’s sales pace was revised down to 724,000 units from the previously reported 769,000 units.
Economists polled by Reuters had forecast new home sales, which account for a small share of U.S. home sales, increasing 3% to rate of 800,000 units in June.
· Fresh skirmishes slow U.S. Senate bipartisan infrastructure talks
Fresh squabbles erupted on Monday between Republicans and Democrats negotiating details of a $1.2 trillion infrastructure plan sought by President Joe Biden, casting doubt on how quickly the U.S. Senate could try again to begin formal debate.
The chamber's top Democrat, Chuck Schumer, said that the Senate may work through the coming weekend and into its scheduled August recess if needed to craft a deal.
"We have reached a critical moment," Schumer said. "The bipartisan group of senators has had nearly five weeks of negotiations since they first announced an agreement with President Biden. It's time for everyone to get to 'yes' and produce an outcome for the American people."
· Tense U.S.-China meeting ends, Beijing official says relations are in a ‘stalemate’
Another high-level meeting between U.S. and Chinese officials — this time in the Chinese city of Tianjin, just outside of Beijing — concluded Monday with criticism from both sides.
· Inflation and delta risks are contributing to a critical ‘inflection point’ on Wall Street, longtime bull warns
· Jim Cramer sees a ‘second reopening’ trade in the recovery stocks
· Oil steady in undersupplied market but virus clouds demand
Oil prices were steady on Monday as the spread of the COVID-19 Delta variant stoked fears over future fuel demand, though crude supply looks set to be tight through the rest of the year.
Brent crude futures for September were up 18 cents at $74.28 a barrel, while U.S. Texas Intermediate crude gained 5 cents to trade at $72.12 per barrel.
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