Gold up on weaker dollar as investors wait on Fed rate path

Nov 24 – Gold prices edged up on Thursday as the US dollar ticked lower, but investors remained largely on the sidelines in holiday-thinned trading with uncertainty around the Federal Reserve’s rate path.

Spot gold was up 0.1% to USD 1,991.79 per ounce at 3:22 p.m. ET (2022 GMT). US gold futures were flat at USD 1,993.30.

“Absent any fresh influences, I still don’t think that gold has the momentum to maintain prices much above USD 2,000 for the rest of the year,” said StoneX analyst Rhona O’Connell.

“Underlying forces are still supportive for the longer term – geopolitics, especially the Middle East and the probability of further banking stresses in the States and elsewhere – but unless either or both of these escalate, we are likely to see prices drift.”

Supporting gold, the dollar eased 0.1% against a basket of other major currencies. Benchmark US 10-year Treasury yields closed at a two-month low on Wednesday.

Lower interest rates decrease the opportunity cost of holding gold.

Trading is expected to be thin with most US markets closed for the Thanksgiving holiday.

“Dollar is slightly cooling down after yesterday’s (economic) data, but it’s very feeble… it’s just a normal market movement amidst lower liquidity,” said ActivTrades senior analyst Ricardo Evangelista.

Investors dialled back expectations of rate cuts in 2024 after data on Wednesday showed the number of Americans filing new claims for unemployment benefits fell more than expected last week.

“The uncertainty in relation to what the Fed will do next will persist for a bit longer,” said Evangelista.

Fed officials agreed at their most recent policy meeting that they would proceed “carefully” and only raise interest rates if progress in controlling inflation faltered, the minutes of the Oct. 31-Nov. 1 gathering showed on Tuesday.

Spot silver rose 0.2% to USD 23.66 per ounce, platinum fell 0.7% to USD 915.55, and palladium dropped 1.1% to USD 1,045.79.

(Reporting by Harshit Verma, Brijesh Patel and Anushree Mukherjee in Bengaluru; Editing by Janane Venkatraman, Kirsten Donovan, Elaine Hardcastle)

Japan CPI to light up dulled Thanksgiving trade

TORONTO, Nov 24 – A look at the day ahead in Asian markets.

With Wall Street shut for Thanksgiving on Thursday, Asian investors will miss the usual swing factor. Instead, Friday’s release of Japan’s core inflation data for October will set the tone for trading in the region.

Japan’s core consumer inflation likely accelerated again in October, staying above the central bank’s 2% price target for a 19th straight month, according to a Reuters poll.

With inflation already exceeding the Bank of Japan’s target for more than a year, the latest data may influence the central bank’s widely expected decision to raise short-term interest rates to around zero from -0.1 next year with some betting on the chance of action in January.

And upside surprise could buoy the yen against the dollar.

The BOJ faces challenges in navigating Japan away from the extremely accommodative policy of the past decade without causing market turmoil or squashing a fragile economic recovery.

In China, property stocks are likely to be in focus again on expectations Beijing would offer a range of financing to support the struggling sector.

It’s a different inflation tale on the other side of the world, with the European Central Bank satisfied with the easing price pressures in the euro zone. That made the ECB’s decision to hold rates steady in October an easy task, according to the accounts of their Oct. 25 to 26 meeting released on Thursday showed.

Stocks in Europe ended firmer, with the ECB news cementing the view that the global central banks are done with their latest tightening campaign, and if price pressures ease, 2024 could be the year of rate cuts.

But some of the inflation-easing trade is already priced into the market, reflected in the near 11% rally in the MSCI world index in the past 18 trading days. And markets need new triggers to fuel the next leg of the equities rally.

One factor could be the resilience of American consumers, who have continued to open their wallets despite higher borrowing costs.

The Black Friday sale will kick off the year-end holiday shopping season and will put to test the U.S. consumers’ appetite for spending.

Early indications are that U.S. retailers across apparel, electronics and home improvement are bracing for challenging times, and higher discounts might not spark the level of spending the companies are hoping for.

(By Denny Thomas. Editing by Josie Kao)

Major Gulf markets fall along with oil prices

Nov 23 – Major stock markets in the Gulf fell in early trade on Thursday on falling oil prices after OPEC+ postponed a ministerial meeting, leading to speculation that producers might cut output less than earlier anticipated.

Brent futures were down USD 1.02, or 1.2%, at USD 80.94 a barrel by 0625 GMT, after falling as much as 4% on Wednesday.

In a surprise move, the Organization of the Petroleum Exporting Countries and allies including Russia delayed to Nov. 30 a ministerial meeting where they were expected to discuss oil output cuts.

Producers were struggling to agree on output levels and hence possible reductions ahead of the meeting originally set for Nov. 26, OPEC+ sources said.

Saudi Arabia’s benchmark index fell 0.1%, on course to extend losses from the previous session, hit by a 0.2% drop in oil giant Saudi Aramco.

US Secretary of State Antony Blinken and Saudi Foreign Minister Prince Faisal bin Farhan Al Saud reaffirmed their commitment to preventing a spread of the Israel-Palestinian conflict on Wednesday, the State Department said.

In Abu Dhabi, the index eased 0.1%.

Trading worldwide was expected to be subdued due to the closure of US markets for the Thanksgiving holiday.

Dubai’s main share index dropped 0.3%, weighed down by a 2.3% fall in Emirates Central Cooling Systems and a 0.5% decrease in sharia-compliant lender Dubai Islamic Bank.

However, the losses were cushioned as confidence grew that interest rates globally will head lower next year.

The Qatari benchmark retreated 0.3%, with petrochemical maker Industries Qatar losing 1.2%.

(Reporting by Ateeq Shariff in Bengaluru. Editing by Bernadette Baum)

Gold gains as lower US dollar, bond yields lift sentiment

Nov 23 – Gold prices rose on Thursday, hovering close to a key USD 2,000 per ounce level as a weaker US dollar and lower Treasury yields buoyed demand for bullion.

Spot gold was up 0.4% at USD 1,996.84 per ounce, as of 0747 GMT, after hitting a three-week high of USD 2,007.29 on Tuesday.

US gold futures GCcv1 gained 0.3% to USD 1,998.20.

“The anticipation of this effective pivot towards interest rate hike cycle peak is translating to ongoing softness in the US dollar and the longer-dated US yield which will support gold prices, at least in the short term,” said Kelvin Wong, senior market analyst for Asia Pacific at OANDA.

The dollar was down 0.2% against its rivals after gains in the previous two sessions, making gold less expensive for other currency holders.

The benchmark US 10-year Treasury yields fell to a two-month low on Wednesday.

The number of Americans filing new claims for unemployment benefits fell more than expected last week, but that likely does not change the view that the labor market is slowing amid higher interest rates.

Traders widely expect the US Federal Reserve to leave rates unchanged in December but dialed back expectations of rate cuts in 2024 after the jobless claims data, according to CME’s FedWatch Tool.

Lower interest rates decrease the opportunity cost of holding gold.

Fed officials agreed at their last policy meeting that they would proceed “carefully” and only raise interest rates if progress in controlling inflation faltered, the minutes of the Oct. 31-Nov. 1 gathering showed on Tuesday.

Meanwhile, US consumers’ inflation expectations rose for a second straight month in November, a survey released Wednesday showed.

Spot gold may revisit its Nov. 21 high of USD 2,007.29 per ounce, as it may have completed a correction from this level, according to Reuters technical analyst Wang Tao.

Spot silver rose 0.4% to USD 23.70 per ounce, platinum climbed 0.4% to USD 926.11 and palladium was steady at USD 1,057.96.

(Reporting by Brijesh Patel in Bengaluru; Editing by Rashmi Aich, Eileen Soreng, Sherry Jacob-Phillips and Sohini Goswami)

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Oil slips 1% on concerns over delayed OPEC+ meeting

Nov 23 – Oil prices dipped about 1% on Thursday, extending losses on expectations that OPEC+ might not deepen output cuts next year after the producer group postponed its policy meeting.

Brent crude futures were down 68 cents, or about 0.8%, at USD 81.28 a barrel by 2024 GMT after falling as much as 4% on Wednesday.

US West Texas Intermediate crude slid 75 cents, or 1%, to USD 76.35 after dropping as much as 5% in the previous session.

Trading activity was muted because of the US Thanksgiving public holiday.

In a surprise move on Wednesday, the Organization of the Petroleum Exporting Countries and allies including Russia delayed a ministerial meeting at which they were expected to discuss oil output cuts to Nov. 30.

Producers were struggling to agree on output levels ahead of the meeting originally set for Nov. 26, OPEC+ sources said, suggesting that the disagreement was largely linked to African nations.

OPEC+ members Angola and Nigeria are aiming for higher oil output, officials told Reuters on Thursday.

“We think Nigeria can be assuaged as the leadership values its longstanding OPEC membership and improving ties with Saudi Arabia,” said RBC Capital Markets analyst Helima Croft.

“However, it may be more difficult to bridge the gap with Angola, which has been a moodier member of the producer group since it joined in 2007.”

The downside move looked overdone and the market will likely rally somewhat next week once traders return from the Thanksgiving holiday, said Phil Flynn, an analyst at Price Futures Group in Chicago.

The questions over OPEC+ supply come as data showed that US crude stocks jumped by 8.7 million barrels last week, much more than the 1.16 million build analysts had expected.

On the demand side, there was more bleak news. Though a survey showed the downturn in euro zone business activity eased in November, data suggested the bloc’s economy will contract again this quarter as consumers continue to rein in spending.

(Reporting by Nia Williams in British Columbia, Natalie Grover in London, Arathy Somasekhar in Houston, and Andrew Hayley in Beijing; Editing by Mark Potter, David Goodman, Alexandra Hudson, Marguerita Choy, and Jonathan Oatis)

Gold drops below USD 2,000 as dollar gains, US yields pare losses

Nov 22 – Gold prices fell below the key USD 2,000 per ounce level on Wednesday as the US dollar rebounded from lows and Treasury yields pared losses, while expectations that the Federal Reserve will pause rate hikes limited the slide in bullion.

Spot gold was down 0.4% at USD 1,991.16 per ounce by 3:05 p.m. ET (2005 GMT) and set for its biggest daily decline since Nov. 10. US gold futures settled 0.4% lower at USD 1,991.30.

“The dollar index has rallied to its daily highs and that’s limiting some buying interest in gold,” said Jim Wyckoff, senior analyst at Kitco Metals, adding that conflicting market forces are making for a steady holiday-type trade.

The dollar index rose 0.3% against its rivals, while Treasury yields pared losses after a strong initial jobless claims data unsettled a market that expects the Federal Reserve to start cutting rates around June as the US economy slows.

Lower interest rates typically boost gold prices as they reduce the opportunity cost of holding non-yielding assets. Bullion scaled a three-week high of USD 2,007.29 in the previous session.

“The increase in the market expectations for the Fed cutting cycle to commence earlier in 2024 has been the prime force driving gold prices higher over the last week,” said Daniel Ghali, commodity strategist at TD Securities.

Fed officials agreed at their last policy meeting that they would proceed “carefully” and only raise interest rates if progress in controlling inflation faltered, minutes of the Oct. 31-Nov. 1 gathering showed.

In other metals, spot silver fell 0.4% to USD 23.66 per ounce. Platinum fell 1.2% to USD 923, while palladium slipped 2% to USD 1,056.91, both eyeing their biggest daily decline since Nov. 10.

(Reporting by Anushree Mukherjee in Bengaluru; Editing by Marguerita Choy and Arun Koyyur)

US recap: Dollar rebounds vs EUR, JPY, GBP as data dims Fed cut hopes

Nov 22 – The dollar index rose 0.4% as Treasury yields advanced after US jobless claims and Michigan sentiment data supported the Fed’s view that it’s too soon to be pricing in rate cuts, which was a message from the minutes released in the previous session.

Two-year Treasury yields rose 0.5bp and rebounded 10bp from pre-jobless claims release session lows, while 10-year yields found support right at August’s highs by the 38.2% Fibo of 2023’s uptrend at 4.34-36%.

The unexpectedly big 24k drop in initial claims during the week of the monthly jobs report survey and the first pullback in continued claims since the first week of October got the rebound in Treasury yields underway, supporting the dollar.

The market largely ignored below-forecast October durable goods orders.

Then the upward revision to Michigan sentiment and rise in 1-year inflation expectations to 4.5% from 4.4% forced Treasury yields up further, to the dollar’s benefit.

EUR/USD fell 0.3% amid a 10bp widening of 2-year Treasury yields over bund yields. Monday and Tuesday’s high were capped near the 61.8% Fibo of the July-October slide at 1.0960, with daily RSIs overbought at that point.

The next macro focus is the November flash PMI releases on Thursday and Friday’s US release, as a nearer-to-real-time gauge of the major economies, which could determine whether EUR/USD’s last Thursday and Friday lows and the 100-day moving average straddling 1.08 hold.

USD/JPY rebounded 0.8%, erasing more than half of its 151.92-147.155 post-US CPI dive, bringing into view the converging 10-, 21- and 30-DMAs in the 150.15-31 range.

The recovery was aided by the Japanese government’s economic view being cut for the first time in 10 months. That following last week’s much large-than-forecast drop in Q3 GDP.

Sterling fell 0.4% amid the dollar’s broader rebound, but also amid British finance minister Jeremy Hunt’s fiscal stimulus plans.

The pound found support exactly at the 1.2450 200-DMA, with risk-sensitive cable’s retreat likely attenuated by rising US equities.

Aussie fell 0.24% after Tuesday’s peak ran into the 200-DMA and Chinese markets and commodities were on the back foot.

Crude trimmed heavy early losses as OPEC+ delayed its next meeting, US crude inventories surged and a 4-day truce and hostage exchange in Gaza was agreed.

(Editing by Burton Frierson; Randolph Donney is a Reuters market analyst. The views expressed are his own.)

Global stock indexes forecast to rise modestly in 2024

BENGALURU, Nov 22 – Most key global stock indexes are forecast to rise modestly over the coming year, closing 2024 below record highs, while a slim majority of stock market experts polled by Reuters expected their markets to touch new peaks within the next six months.

Much will depend on interest rate expectations now central banks are mostly done with a season of aggressive rate rises since the COVID pandemic to dampen a burst of inflation still not completely under control.

Traders and analysts mostly assume the US Federal Reserve will be cutting interest rates by the middle of next year, an outcome that is far from certain and does not clearly align with policy statements from top central bankers.

Those rate-cut expectations are partly behind the views of a slim majority of survey respondents, 46 of 82, who said most key indexes would reclaim record highs by then.

However, only a handful of the 15 top stock indexes were predicted to trade at record peaks by end-2024, based on a wider Nov. 9-22 poll of more than 120 stock market experts.

“After two straight quarters recommending cash over stocks and bonds, we now expect equities to eke out high single-digit returns in 2024 and outperform core fixed income,” noted Ajay Rajadhyaksha, global chairman of research at Barclays.

“Yes, we expect the economy to grow more slowly next year, in both real and nominal terms…But the downside risks to the world economy have diminished greatly. We think stocks will benefit from a fairly benign bottom to this business cycle.”

A strong majority of respondents, 72 of 85, expected corporate earnings in their local market to increase over the coming six months. The remaining 13 said they would decrease.

Despite high interest rates, cooling global inflation, and with it, economic activity, only a slim majority of respondents, 44 of 80, said value stocks would outperform growth stocks over the next six months.

LOWER BOND YIELDS

For now, markets are pricing in a series of 2024 rate cuts, which is sending bond yields lower and stock prices higher.

US 10-year Treasury note yields breached 5.00% last month for the first time since July 2007 but are not expected to revisit that level according to a separate Reuters poll of bond strategists who were proven wrong on the same call for three straight months.

Lower bond yields will likely be required to further any expected gains in stocks, as they had reached a point where investors had got used to years of paltry yields but now represent good value along with security.

But it is not at all guaranteed that trend will continue, having fallen around 60 basis points on US 10-year yields in the last few weeks alone.

“Falling bond yields are being interpreted by equity markets as a positive in the near-term,” said Marko Kolanovic, chief global markets strategist at J.P. Morgan.

“However, we believe that equities will soon revert back to an unattractive risk-reward as the Fed is set to remain higher for longer, valuations are rich, earnings expectations remain too optimistic, pricing power is waning, profit margins are at risk and the slowdown in topline growth is set to continue.”

The benchmark S&P 500 index was forecast to finish next year at 4,700, only about 3% higher from its Monday close, with a possible US economic slowdown or recession among the biggest risks for the market in 2024.

European equity markets were also expected to eke out modest gains in 2024 as optimism that global interest rates have peaked is offset by worries the economy could fall into a recession.

The pan-European benchmark STOXX 600 index was forecast to rise 4.1% to 475 points by the end of next year, from Monday’s close at 456.26.

Canada’s main stock index was expected to rise less than previously thought over the coming year as a slowdown in the global economy weighs on the outlook for corporate earnings.

Among the indices surveyed Japan’s Nikkei 225 and India’s BSE index were expected to continue their strong performance into the next year with the Nikkei expected to reach a three-decade high of 35,000 by end-June of next year and the BSE forecast to hit new highs in 2024.

(Reporting by Hari Kishan and Indradip Ghosh; Additional reporting and polling by correspondents in Bengaluru, Buenos Aires, London, Mexico City, Milan, New York, San Francisco, Sao Paulo, Tokyo, and Toronto; Editing by Ross Finley and Alex Richardson)

China stocks inch lower as investors await more support measures

HONG KONG, Nov 22 – China stocks slid and Hong Kong shares were little changed on Wednesday as market participants awaited more stimulus for the Chinese economy as it struggles to get back on solid footing.

Markets also fell after Wall Street closed lower overnight after Federal Reserve minutes showed that officials agreed to take a cautious approach to raising rates going forward.

** The blue-chip CSI 300 Index retreated 1%, while the Shanghai Composite Index edged down 0.8%.

** Hong Kong’s Hang Seng Index and the Hang Seng China Enterprises Index were largely flat.

** Chinese government advisers will recommend economic growth targets for 2024 ranging from 4.5% to 5.5% to an annual policymakers’ meeting as Beijing seeks to create jobs and keep long-term development goals on track, Reuters reported.

** Reaching such targets would require Beijing to step up fiscal stimulus, the advisers said.

** All eyes are on China’s incremental policy support in the coming months to strengthen recovery momentum into 2024.

** Yan Wang, chief China strategist at Alpine Macro, said there was no sign of meaningful sequential improvement in China’s macro economic numbers yet.

** “While the Xi-Biden summit may cool off the geopolitical tension, domestic policies still hold the key to China’s economic performance,” he said in a note, referring to last week’s leaders summit.

** Hong Kong shares of Baidu Inc jumped 4.5% to hit a five-week peak after the company beat expectations for its third-quarter earnings.

** The wider Hang Seng Tech Index dropped 0.2%.

** In China A-shares, new energy stocks fell 2.2% to lead the decline.

** Meanwhile, China’s yuan held steady against the dollar as the country’s central bank continued to lend support via a strong midpoint fixing.

(Reporting by Summer Zhen; Editing by Subhranshu Sahu)

FTSE 100 rises on higher gold prices, Sage results

Nov 22 (Reuters) – The UK’s FTSE 100 rose on Wednesday, as higher gold prices spurred an uptick in precious metal miners, while Sage led gains on the index after the software firm’s profit jump.

The large-cap FTSE 100 gained 0.1% at 8:12 GMT, while the mid-cap index was up 0.2%.

Precious metal miners rose 0.5% as gold prices moved higher due to the weaker dollar and dip in US bond yields amid expectations that the Federal Reserve was done hiking interest rates.

Shares of Sage SGE.L jumped 6.1% after the software company reported an 18% rise in full year underlying operating profit.

Johnson Matthey raised its outlook for full year underlying operating performance, boosting the autocatalyst maker’s shares by 3.4% and spurring a 1.2% gain in the broader chemicals index.

Severn Trent dropped 1.2% after the water utility posted a fall in half-yearly profit, mainly hurt by higher energy and chemical prices.

(Reporting by Khushi Singh; Editing by Savio D’Souza)

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