• MTS Gold Morning News 20211006

    6 Oct 2021 | Gold News

Gold drops as rising U.S. yields, firm dollar dent appeal

Gold prices fell as much as 1.2% on Tuesday, as firmer U.S. Treasury yields and a stronger dollar dented the safe-haven metal’s appeal, with investors awaiting key U.S. non-farm payrolls data due later this week.


·         Spot gold was down 0.5% at $1,760.30 per ounce by 1:35 p.m. EDT (1735 GMT), and was set for its first dip in four sessions.

·         U.S. gold futures settled down 0.4% at $1,760.9.

 

·         Upward moves in the dollar and bond yields, after the light pullback seen over the last several days and a rebound in the equity market, are driving gold down, said David Meger, director of metals trading at High Ridge Futures.

 

·         U.S. non-farm payrolls data due on Friday is expected to show continued improvement in the labor market, which could prompt the U.S. Federal Reserve to begin tapering its monetary stimulus before year-end.

 

·         Reduced stimulus and higher interest rates lift bond yields, weighing on gold as it raises the opportunity cost of holding non-interest-bearing bullion.

 

·         “While gold could still move higher, a significant move would require a break above technical resistance, especially the 21-day moving average,” said Saxo Bank analyst Ole Hansen.

 

·         Meanwhile, Wall Street’s main indexes rebounded as growth stocks bounced from a sharp selloff.

 

·         “The U.S. dollar index is also firmer today and that’s a negative for the metals markets. Still, the global equities markets remain wobbly and that should limit the downside in the safe-haven metals,” said Jim Wyckoff, senior analyst with Kitco Metals, in a note.

 

·         Elsewhere, spot silver slipped 0.3% to $22.59 per ounce, platinum dropped 0.5% to $962.59, while palladium firmed 0.2% to $1,909.33.

 

·         Bitcoin soars to $50,000 again on institutional demand

 


·         IMF trims 2021 GDP forecast, citing 'vaccine divide,' inflation

The International Monetary Fund expects global economic growth in 2021 to fall slightly below its July forecast of 6%, IMF chief Kristalina Georgieva said on Tuesday, citing risks associated with debt, inflation and divergent economic trends in the wake of the COVID-19 pandemic.

 

·         U.S. services activity forges ahead; trade deficit races to record high

U.S. services industry activity nudged up in September, but growth is being restrained by a persistent shortage of inputs and the resulting high prices as the pandemic drags on.

The ISM’s non-manufacturing activity index edged up to a reading of 61.9 last month from 61.7 in August. A reading above 50 indicates growth in the services sector, which accounts for more than two-thirds of U.S. economic activity. Economists polled by Reuters had forecast the index falling to 60.





But even as the services industry pushes ahead, evidence is mounting that economic growth slowed significantly in the third quarter. A separate report from the Commerce Department on Tuesday showed the trade deficit surged 4.2% to a record $73.3 billion in August. Economists had forecast the trade gap widening to $70.5 billion.




Following the trade data, the Atlanta Fed cut its third-quarter gross domestic product estimate to a 1.3% annualized rate from a 2.3% pace.

The economy grew at a 6.7% pace in the second quarter. Trade has subtracted from GDP growth for four straight quarters.

 

 

·         White House to tap business leaders to push Republicans on debt ceiling - source


·         Treasury Secretary Janet Yellen said Tuesday she believes the economy would fall into a recession if Congress fails to raise the debt ceiling before a default on the U.S. debt.

In Washington, lawmakers are still trying to agree to raise or suspend the U.S. borrowing limit and avert a dangerous first-ever default on the national debt. The Treasury Department warned last week that lawmakers must address the debt ceiling before Oct. 18 when officials estimate the U.S. will exhaust emergency efforts to honor its bond payments.

 

·         Schumer sets U.S. debt ceiling vote for Wednesday as tensions rise


·         U.S. Senate to vote on debt ceiling, Republicans say they will oppose


·         U.S. expected to raise debt limit, avoid default -Moody's

Moody's Investors Service said on Tuesday the stable outlook on the United States' Aaa rating reflects its view that the country would raise its debt limit and continue to meet its debt service obligations in full and on time.

 

·         U.S. risks losing its 'edge' without big infrastructure spending, Biden says

President Joe Biden warned on Tuesday that failure to pass his huge social and infrastructure spending package could contribute to America's decline, while lawmakers in his Democratic Party wrangled over its price tag.

Squabbling Democratic moderates and progressives dealt Biden a setback last week when they failed to move ahead with his proposed $trillion infrastructure bill or a planned $3.5 trillion social spending bill, which is now facing cuts.

 

·         USTR seeks public comment on tariff exclusions for 549 Chinese import categories

The U.S. Trade Representative’s office said on Tuesday it is seeking public comments on plans to revive a targeted tariff exclusion process for imports from China, specifically whether to reinstate previously extended exclusions on 549 import product categories.


USTR said it would accept public comments from Oct. 12 through Dec. 1 on possible exclusions for a list of products that includes industrial components, thermostats, medical supplies, bicycles and textiles.

 

·         Senator Warren says Fed Chair Powell has 'failed' as a leader

Senator Elizabeth Warren on Tuesday sharpened her criticism of Federal Reserve Chair Jerome Powell, saying he has failed not only to effectively regulate the financial system but also to address perceived ethical lapses by top Fed officials.

 

·         White House says Biden has confidence in Fed Chair Powell

 

·         Chinese developer misses bond payment as stress spreads beyond Evergrande crisis

On the heels of Evergrande’s debt crisis, there are increasing signs of stress in China’s property market after one developer failed to make a bond payment on Tuesday.

Ratings agencies have downgraded Chinese developers Fantasia Holdings and Sinic Holdings over risks from their strained cash flow situations.

Fantasia did not repay the principal amount of $206 million of a bond that matured on Monday, it said in a filing to the Hong Kong exchange.

The firm has halted trading of its shares since Sept. 9 until further notice, it said. Those shares have plummeted nearly 60% year-to-date.

 

·         Gas price surges to a record high in Europe on supply concerns

 

·         S&P keeps Thailand's BBB+ rating

The government has welcomed the decision by Standard & Poor (S&P) Global Ratings to maintain Thailand's sovereign credit rating at BBB+ and rate the kingdom's economy as having a stable outlook.

 

Published on Monday, the positive credit rating and economic outlook were awarded to Thailand for its strong finance and foreign currency parameters, despite the global economic doldrums caused by Covid-19.

S&P expects the economy will grow 1.1% this year and a further 3.6% annually until 2024, said government spokesman Thanakorn Wangboonkongchana, citing the report.

 

·         COVID-19 UPDATES:




Reference: CNBC, Reuters, Worldometers


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