Gold eases as dollar firms at start of busy Fed week

June 12 (Reuters) – Gold prices dipped on Monday as the dollar and bond yields firmed, while traders braced for a busy week of key U.S. inflation prints and major central bank policy meetings, with all eyes on the Federal Reserve.

Spot gold fell 0.4% to USD 1,953.77 per ounce by 1:40 p.m. EDT (1740 GMT). U.S. gold futures settled 0.4% lower at USD 1,969.70.

The dollar index edged up 0.2%, making gold more expensive for overseas buyers, while a rise in U.S. Treasury yields made zero-yielding bullion less attractive.

“Going into this week with gold is almost like a coin flip,” said Bob Haberkorn, senior market strategist at RJO Futures.

The U.S. consumer price index for May is due at 8:30 a.m. EDT on Tuesday, with the producer price index reading due on Wednesday morning ahead of the Fed’s interest rate decision later that day.

“The fact that if we get a halt on rate hikes would push gold up pretty big despite a hawkish (Fed) statement,” Haberkorn said.

Markets priced in a 76% chance of the Fed keeping rates unchanged, and a 71% chance of a hike in July, according to CME’s Fedwatch tool.

The European Central Bank and the Bank of Japan will deliver their rate decisions on Thursday and Friday, respectively.

“Gold is trading on the assumption that U.S. interest rates will stay where they are with any hike likely to send the precious metal crashing down towards USD 1,900 an ounce,” Kinesis Money analyst Rupert Rowling said in a note.

Silver fell 1.3% to USD 23.95 per ounce, while platinum dipped 1.92% to a two-month low at USD 989.67.

Palladium, used in emissions-controlling devices in cars, gained 1.4% to USD 1,342.27, after hitting its lowest since May 2019 on Friday.

“Palladium could head back above USD 1,500 in the fourth quarter of this year owing to improving automotive production, however, this is currently under pressure from destocking by the automakers,” said Metals Focus analyst Jacob Smith.

(Reporting by Deep Vakil and Seher Dareen in Bengaluru; Editing by Conor Humphries and Shailesh Kuber)

Oil prices settle down 4% on jitters ahead of US Fed meeting

BENGALURU, June 12 (Reuters) – Oil prices fell by around USD 3 a barrel on Monday after analysts highlighted rising global supplies and concerns about demand growth just ahead of key inflation data and a US Federal Reserve meeting later this week.

Brent crude futures fell USD 2.95, or 3.9%, to settle at USD 71.84 a barrel, their lowest since Dec. 2021. West Texas Intermediate crude fell USD 3.05, or 4.4%, to settle at USD 67.12 a barrel.

Goldman Sachs cut its oil price forecasts early on Sunday, citing higher-than-expected supplies later this year and through 2024. The bank’s December crude price forecast now stands at USD 86 a barrel for Brent, down from USD 95, and at USD 81 a barrel for WTI, down from USD 89.

“Goldman capitulating on their bullish price forecast appears to have been the catalyst to kickstart selling today,” said Kpler analyst Matt Smith.

The revision comes at the start of a busy week for the US Federal Reserve, which meets on Wednesday. While the Fed is expected to leave interest rates unchanged this month, investors are concerned that rate hikes are likely to resume next month, said UBS analyst Robert Yawger.

The Fed’s rate hikes have strengthened the dollar, making commodities denominated in the US currency more expensive for holders of other currencies and weighing on prices.

“The Fed meeting and inflation pressures remain key issues for the market this week,” said Rob Haworth, senior investment strategist at US Bank Asset Management.

“The more likely hold on interest rates means investors will closely track Fed Chair Powell’s press conference for the expected path for interest rates,” Haworth said.

Also weighing on investors’ minds, oil demand recovery has been muted in China, the top importer of crude oil and refined products.

“Chinese demand has shown no signs of materializing, and it could be as much as 2 million barrels a day, so it is a significant amount. There are definitely fears that OPEC and IEA will cut their demand forecasts,” Yawger said.

The Organization of Petroleum Exporting Countries and the International Energy Agency will each release their monthly market updates on Tuesday.

Last week, both Brent and WTI posted a second straight weekly decline after disappointing Chinese economic data erased the price boost from Saudi Arabia’s pledge to cut production in July.

(Reporting by Shariq Khan; Additional reporting by Noah Browning, Florence Tan, and Mohi Narayan; Editing by Emelia Sithole-Matarise, Jason Neely, Paul Simao, Sharon Singleton, Deepa Babington, and David Gregorio)

PH inter-agency panel keeps 2023 GDP growth target at 6.0%-7.0%

MANILA, June 9 (Reuters) – A Philippine government inter-agency panel on Friday maintained its growth target for 2023 gross domestic product at 6.0% to 7.0%, taking into account both domestic and external risks.

The Southeast Asian nation’s GDP growth target for the 2024 to 2028 period was kept at 6.5% to 8.0%, it added, following a review of macroeconomic and fiscal assumptions.

The panel includes the central bank, departments of finance and budget and the economic planning agency.

“These projections have already taken into account the risks posed by El Nino and other natural disasters, global trade tensions, and value chain disruptions, among other factors,” it said in a statement read during a press conference.

The panel decided to revise the 2023 inflation assumption to a narrower range of 5.0% to 6.0% versus the previous assumption of 5.0% to 7.0%.

For 2024 to 2028, the inflation assumption has been kept at 2.0% to 4.0%.

(Reporting by Neil Jerome Morales and Enrico Dela Cruz; Editing by Martin Petty)

China inflation could spoil the weekend party

June 9 (Reuters) – A big dollar fall, historically low volatility, lower bond yields, and Wall Street on the march with the S&P 500 joining the Nasdaq in the bull market territory – Thursday’s global market moves augur well for a strong end to the week in Asia on Friday.

Any optimism could be punctured, however, by inflation data from China. If they are in line with other indicators lately that show Asia’s biggest economy is sputtering, China’s stocks, bonds, and currency may come under renewed heavy pressure.

Consumer prices are expected to decline 0.1% in May and rise 0.3% year on year. April’s CPI report showed inflation virtually evaporated, highlighting Beijing’s challenge to stimulate enough economic activity and growth to kill the threat of deflation.

It is proving to be a major headache – outright producer price deflation is expected to have intensified in May, with the annual rate of price falls accelerating to 4.3%, according to a Reuters poll. That would be the fastest rate of PPI decline since March 2016.

China’s yuan has been sliding to fresh 2023 lows nearly every day for the past three weeks and the main stock indexes have followed a similar pattern, but it’s a different story elsewhere.

Revised figures on Thursday showed Japan’s economy grew much faster than initially thought over the January-March period, as a post-pandemic pickup in domestic spending and company restocking offset the hit to exports from slowing global demand.

The Japanese yen rallied strongly, also propelled further by a soft US employment indicator to its best day in a month. The weak jobless claims figures torpedoed the dollar more broadly, sank Treasury yields, and cooled Fed rate hike expectations.

This is usually a healthy mix for risk appetite, and so it proved on Thursday. Both the MSCI World index and MSCI Asia ex-Japan indices are on course for their second consecutive weekly rise, something neither has managed since March, and Wall Street jumped.

Remarkably, the main measure of US stock market volatility is at a pre-pandemic low, and implied global FX volatility is its lowest in over a year too. That should give Asian markets the platform for a positive day on Friday.

Here are three key developments that could provide more direction to markets on Friday:

– China CPI inflation (May)

– China PPI inflation (May)

– South Korea current account (April)

(By Jamie McGeever; editing by Deepa Babington)

Behold Wall Street’s new bull market, maybe

NEW YORK, June 8 (Reuters) – S&P 500 advanced on Thursday, putting the benchmark index up 20% from its Oct. 12 closing low and heralding the start of a new bull market, at least by the definition of some market participants.

Part of the uncertainty is that there is no set definition of a bull or bear market, or any sort of regulatory body that declares one, such as the National Bureau of Economic Research (NBER) does with recessions.

The S&P 500 rose 0.6% in Thursday’s session, lifted by technology stocks, while volatility dropped to record lows ahead of an eventful economic and policy calendar next week.

The Nasdaq added 1%, and it is now up nearly 30% from its closing low last December.

The most commonly accepted definition is a 20% rise off a low for a bull market and a 20% decline from a high for a bear market, but even that is open to interpretation.

“The problem is there is no authority of rules or regulations on there, 20% came back from the really olden days, like during the First World War, it was the first time we see it,” said Howard Silverblatt, senior index analyst at S&P Dow Jones Indices in New York.

According to Silverblatt, there have been 15 bear markets for the benchmark S&P index, beginning in September 1929, at the end of the Roaring Twenties boom, to the current one which began on Jan 3, 2022.

Sam Stovall, chief investment strategist at CFRA in New York, adds a time element to his bear market criteria, requiring a low to remain intact for a duration of at least seven months, which he believes removes the risk of a quick reversal lower after a rally of 20% or more, such as what happened during the Great Financial Crisis.

“In 2008, the S&P hit its low on Nov 20, we then advanced by more than 20% into early January only to turnaround and set an even lower low, by March 9,” said Stovall. “I just think it was a blip within a longer-term bear market.”

In a note on Monday, Dan Suzuki, deputy chief investment officer at Richard Bernstein Advisors in New York, took an even more layered approach since “it is certainly possible for this rally to evolve into a full-fledged bull market, historical precedent suggests it is far from a foregone conclusion.”

One commonality Suzuki found in bull markets is broad participation across sectors, something lacking in the current rally as most of the more than 11% gain in the S&P 500 this year has been concentrated among a small amount of very large stocks such as Nvidia (NVDA), Meta Platforms (META) and Amazon (AMZN).

“Certainly, it’s a bull market in big-cap technology. I wouldn’t call it a bull market in a broad market sense, because there are only certain stocks that are really in what we would call bull market territory, and it’s just not a broad enough move to call it a sustainable bull market,” said Tim Ghriskey, senior portfolio strategist Ingalls & Snyder in New York.

Taking a different view altogether is Ned Davis Research, which the Stock Trader’s Almanac relies on for defining bull and bear markets. It says that a cyclical bull market requires a 30% rise after 50 calendar days or a 13 percent rise after 155 calendar days for the Dow Jones Industrial Average or the Value Line Geometric index, an equal-weighted index of nearly 1,700 stocks.

But while the S&P 500 has just cleared the 20% hurdle, for some, a new bull market will not begin until the index clears its prior high from January 2022, according to Silverblatt, and until then, “it’s a bull run in a bear market.”

(Reporting by Chuck Mikolajczak, additional reporting by Noel Randewich and Lewis Kruaskopf; Editing by Alden Bentley)

Wall Street ends up amid record low volatility ahead of eventful week

June 8 (Reuters) – US stocks closed higher on Thursday regaining some of their momentum thanks to a rebound by technology stocks, while volatility dropped to record lows ahead of an eventful economic and policy calendar next week.

The CBOE Volatility index, also known as Wall Street’s fear gauge, dropped to a fresh post-pandemic record low.

“What you are really seeing in the vol market is an unwillingness to engage,” said David Bianco, Americas chief investment officer for asset manager DWS Group. “You’ve just got paralysis in investors.”

Investors were sitting on the sidelines ahead of inflation data and a Federal Reserve policy meeting next week.

Traders have priced in a 73% chance of the US central bank holding interest rates at the current 5%-5.25% range during its monetary policy meeting on June 13-14, according to CMEGroup’s Fedwatch tool. However, they see a 50% chance of a rate hike in July.

The two-year Treasury yield, which tends to move in step with short-term rate expectations, slipped from one-week highs to 4.51% after a sharp jump in weekly jobless claims signaled a softening labor market.

The US Labor Department is due to release inflation data on June 13, the first day of the Fed meeting. The numbers are expected to show consumer prices cooled slightly in May but core prices remained sticky.

Meanwhile, a rebound by technology and megacap stocks helped major indexes regain their footing amid thin volumes.

Heavyweight Amazon.com Inc (AMZN) gained 2.49% as Wells Fargo initiated coverage on the company with an “overweight” rating, while Nvidia Corp (NVDA), Apple Inc (AAPL) and Tesla Inc (TSLA) rose between 1.55% and 4.58%.

GameStop Corp (GME) tanked 17.89% as billionaire investor Ryan Cohen took over as executive chairman after the video-game retailer ousted its CEO and posted a bigger-than-expected quarterly loss.

The Dow Jones Industrial Average rose 168.59 points, or 0.5%, to 33,833.61, the S&P 500 gained 26.41 points, or 0.62%, to 4,293.93 and the Nasdaq Composite added 133.63 points, or 1.02%, to 13,238.52.

Among the 11 major S&P sectors, consumer discretionary led the charge, while real estate and energy indexes slipped, with the latter being hit by a drop in oil prices.

Adobe (ADBE) jumped 4.95% after Piper Sandler raised its price target on the stock to USD 500. The Photoshop software maker said it was offering its AI tool “Firefly” to large businesses.

Lucid Group (LCID) tumbled 1.88% after the US luxury electric-vehicle maker’s head of China operations, Zhu Jiang, said the company was preparing to enter the world’s largest auto market.

Advancing issues outnumbered declining ones on the NYSE by a 1.16-to-1 ratio; on Nasdaq, a 1.02-to-1 ratio favored advancers.

The S&P 500 posted 12 new 52-week highs and two new lows; the Nasdaq Composite recorded 71 new highs and 43 new lows.

(Reporting by Sruthi Shankar and Shristi Achar A in Bengaluru; Editing by Vinay Dwivedi and Marguerita Choy)

Gold jumps as US dollar, yields dip after jobless claims data

June 8 (Reuters) – Gold prices climbed more than 1% on Thursday as the dollar and bond yields slipped after data showed US weekly jobless claims surged last week, cementing expectations that the Federal Reserve will pause its interest rate hiking cycle.

Spot gold rose 1.2% to USD 1,962.49 per ounce by 01:42 p.m. EDT (1742 GMT).

US gold futures settled up 1% at USD 1,978.60.

The number of Americans filing new claims for unemployment benefits surged last week, suggesting that the labor market was slowing amid mounting risks of a recession.

“This data shows a further weakness in the US economy, which is good news for gold as it will allow the Fed to be on hold,” said Edward Moya, senior market analyst at OANDA.

“If we get further softness in inflation, if the Fed holds and they really don’t signal a strong likelihood of a hike for the next meeting, then there is a good case for gold to edge higher.”

Following the jobs data, the dollar slipped 0.7% to a two-week low against its rivals, making gold less expensive for other currency holders, while benchmark US 10-year Treasury yields tumbled.

Money market participants now see a 71% chance that the US central bank will skip raising interest rates at its policy meeting next week, according to the CME’s Fedwatch tool.

Lower US interest rates put pressure on the dollar and bond yields, increasing the appeal of non-yielding bullion.

The US consumer inflation report for May, due on June 13, could provide more clarity about the health of the world’s largest economy.

“There’s a lot of uncertainty and you could see it in gold prices, if yields really start to back off here, then gold could move much higher,” said Daniel Pavilonis, senior market strategist, RJO Futures.

Elsewhere, silver jumped 3.4% to USD 24.24 per ounce, while platinum fell 0.7% to USD 1,010.93.

Palladium dipped 2.7% to USD 1,351.90, after falling to its lowest since June 2019 at USD 1,348.74 earlier in the session.

(Reporting by Brijesh Patel, Ashitha Shivaprasad, and Seher Dareen in Bengaluru; Editing by Elaine Hardcastle, Emelia Sithole-Matarise, and Krishna Chandra Eluri)

Oil prices partially recover after US, Iran deny reported nuclear deal

June 8 (Reuters) – Oil prices settled lower on Thursday but rebounded from earlier losses after the US and Iran both denied a report that they were close to a nuclear deal.

Oil fell by more than USD 3 on the report that the US would give Iran sanctions relief to export oil in return for Tehran reducing uranium enrichment.

A spokesperson for the White House National Security Council called the report “false and misleading”.

Brent crude settled down 99 cents, or 1.3%, at USD 75.96 a barrel while US West Texas Intermediate crude settled down USD 1.24, or 1.7%, to USD 71.29.

“If there’s no Iran deal then we’re back where we were before, focused more on fuel demand,” said John Kilduff, partner at Again Capital LLC in New York.

Oil prices were lower earlier after the US reported a larger-than-expected rise in gasoline inventories on Wednesday. That raised concern about US fuel demand, with the peak summer driving season well underway.

Demand concerns outweighed the prospect of tighter supply after Saudi Arabia pledged at a weekend OPEC+ meeting to cut crude output by 1 million barrels per day in July. That unilateral cut was in addition to the group’s broader deal to extend existing supply curbs into 2024.

Oil prices could get a lift if the US Federal Reserve skips a rate hike at its next meeting on June 13-14, said Tamas Varga from PVM brokerage. Economists polled by Reuters expect no hike at the meeting.

The US dollar was slightly weaker on Thursday, making oil cheaper for buyers holding other currencies.

(Reporting by Laura Sanicola; Additional reporting by Jeslyn Lerh; Editing by Chris Reese, Sharon Singleton, and Lisa Shumaker)

Indian rates, Japan GDP in the spotlight

June 8 (Reuters) – An interest rate decision from India and revised Japanese GDP will be the big local drivers for Asian markets on Thursday, with wider sentiment soured by a profit-taking slump in US tech stocks and a surprising rate hike in Canada.

After rallying more than 25% this year, and more than 20% from the US banking shock low in March, the Nasdaq had its worst day since April, sliding 1.3%.

The index of Mega Tech stocks that has driven this year’s US equity rally almost single-handedly – up more than 60% this year – slumped almost 3% for its biggest fall since February.

The Bank of Canada’s decision to raise rates to a 22-year high of 4.75% was not widely expected. This followed an equally surprising rate hike from Australia the day before, a one-two hawkish punch from policymakers that investors had probably not braced for.

Throw in a 1% rise in oil prices, a slump in Chinese trade activity, and the yuan hitting a fresh 6-month low, and the backdrop for Asian markets in the second half of the week looks a bit darker than the first half.

The Reserve Bank of India is expected to leave its key interest rate unchanged at 6.50% and for the rest of 2023, according to a Reuters poll of economists. Although inflation hit an 18-month low of 4.70% in April, it is not seen falling to the RBI’s 4% medium-term target for at least another two years.

If inflation is that sticky, investors can perhaps expect a ‘hawkish pause’ rather than a ‘dovish pause’ from the RBI, especially in light of the hawkish surprises from Australia and Canada this week.

Japanese first-quarter growth, meanwhile, is expected to be revised up one-tenth of a percent to 0.5% on a quarterly basis, and three-tenths of a percent to 1.9% on an annualized basis, thanks to solid investment from manufacturers.

The US dollar is back above 140.00 yen and a soft GDP print could push it closer to the year-to-date high just below 141.00 yen. A narrower-than-expected current account surplus in April, figures for which are also out on Thursday, could do the trick too.

The Australian dollar, which hit a one-month high on Wednesday following the RBA’s rate hike, could get a nudge from Australian trade data on Thursday. The consensus forecast is for the surplus to narrow slightly from March to A$14 billion.

Here are three key developments that could provide more direction to markets on Thursday:

– India interest rate decision

– Japan GDP (Q1, revised)

– Australia trade (April)

(By Jamie McGeever)

US recap: EUR/USD sheds gains as BoC hike lifts US yields, hits risk

June 7 (Reuters) – The dollar index recovered from early modest losses as Treasury yields rose with an assist from the BoC’s somewhat surprising rate hike and amid hefty Treasury and corporate US debt issuance before of next week’s Fed, ECB, and BoJ meetings.

The initial dollar slides versus CAD and AUD after Wednesday and Tuesday’s surprise BoC and RBA rate hikes came in for corrections as Treasury yields rebounded and risk came off.

USD/CNH resumed its rise amid tumbling Chinese exports, and Chinese banks cutting deposit rates and reportedly being told to lower the cap on dollar deposits, but mostly due to higher Treasury yields.

EUR/USD’s slip from early highs on ECB rate hike hopes merely left it flat on the day, as bund yields also rose roughly in line with Treasury yields. The pair remains in a tight range just above May’s 1.0635 lows on EBS.

The Fed remains priced to most likely skip hiking rates next week, waiting until July instead, but probabilities of a rate cut this year have dwindled.

The ECB is widely expected to hike 25bp next week and in July before going on hold until Q2 2024.

USD/JPY gained 0.37% on the back of 2- and 10-year Treasury yields rising roughly 5bp and 9bp, with JGB yields basically static due to the BoJ’s yield curve control, a policy seen enduring after next week’s BoJ meeting.

USD/JPY faces major resistance at 142.00-50, beyond May’s overbought 140.93 peak, as it, and the dollar more broadly, might need a more hawkish Fed outlook after CPI and the policy meeting next week to clear those hurdles.

Sterling fell back from 1.2500 highs to post a 0.2% gain, as risk-off flows and Treasury yields rise weighed versus the 100bp of BoE hikes still priced to come.

Thursday features jobless claims, but the focus is fully on next week’s CPI and central bank meetings.

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

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