Gold falls to three-week low on robust dollar, Fed rate-hike fears

Aug 19 (Reuters) – Gold prices slipped to a three-week low on Friday and were set for their first weekly drop in five, as a stronger dollar and prospects of more rate hikes by the US Federal Reserve dented bullion’s appeal.

Spot gold was down 0.2% at USD 1,753.97 per ounce, as of 0706 GMT, after falling to its lowest since July 28 at USD 1,751.01 earlier in the session. For the week, bullion was down 2.6%.

US gold futures eased 0.1% to USD 1,768.90.

“Markets are expecting interest rates to go further up and of course the strong dollar is definitely weighing on gold prices at the moment,” said Brian Lan, managing director at dealer GoldSilver Central.

“Many are staying on the sidelines expecting gold prices to go further down. Also, we’ve seen quite a bit of liquidation on the ETF (exchange-traded fund) side.”

The dollar surged to a one-month high against its rivals, making gold more expensive for buyers holding other currencies.

The Fed needs to keep raising borrowing costs to bring high inflation under control, several US central bank officials said on Thursday.

St. Louis Fed President James Bullard said he was currently leaning toward supporting a third straight 75-basis-point rate hike in September.

Gold is highly sensitive to rising US interest rates, as they increase the opportunity cost of holding non-yielding bullion.

In the July meeting minutes released on Wednesday, Fed officials said the pace of future rate hikes would depend on incoming economic data.

Data on Thursday showed the number of Americans filing new claims for unemployment benefits fell last week, suggesting labour market conditions remain tight.

On the technical front, spot gold may fall to USD 1,744 per ounce, as it has broken a support at USD 1,759, according to Reuters analyst Wang Tao.

Spot silver fell 0.9% to USD 19.34 per ounce and was on track for its biggest weekly percentage fall since late-January.

Platinum fell 0.4% to USD 906.96 per ounce and palladium slipped 0.6% to USD 2,142.47.

(Reporting by Brijesh Patel in Bengaluru; Editing by Subhranshu Sahu and Vinay Dwivedi)

Shares choppy, US yields fall as investors digest Fed minutes

NEW YORK, Aug 18 (Reuters) – Global equity markets were choppy and US Treasury yields fell on Thursday, as uncertainty over the pace of interest rate hikes prevailed among investors after the Federal Reserve’s meeting minutes showed officials were determined to curb rising prices.

Markets have been volatile amid concerns about a looming recession, even though Fed officials indicated in the minutes of their July meeting released on Wednesday that they would adopt a less aggressive stance if inflation starts to recede.

“The markets are still trying to figure out the Fed minutes,” causing volatility, said Charles Self, chief investment officer at Tandem Wealth Advisors in Appleton, Wisconsin.

“The minutes were uniformly hawkish in our view,” Self added. “It’s clear that among all the voting members that curing inflation is the No. 1 choice and they’re going to do whatever is necessary as far as raising rates to get there. We think they’re using the labor market as cover.”

MSCI’s gauge of stocks in 50 countries across the globe .MIWD00000PUS rebounded from earlier losses and was up 0.05%. The pan-European STOXX 600 index closed higher at 0.39%.

US Treasury yields edged lower as investors continued to digest the Fed meeting minutes. A string of Fed officials, including St. Louis Fed President James Bullard and San Francisco Fed President Mary Daly, reiterated on Thursday that the US central bank needs to keep raising interest rates to rein in inflation.

Benchmark 10-year notes were down to 2.8859%, from 2.895% on Wednesday. Two-year notes retreated to 3.2057%, from 3.295%.

The yield curve between two- and 10-year Treasury notes, widely viewed as an indicator of impending recession, remained inverted at minus 38 basis points on Thursday.

“Since the Fed’s July 27 meeting, the two-year yields have been up 43 basis points, meaning that the bond market thinks they’re going to raise rates higher for a longer period of time, whereas the stock market has been up 5%, meaning the market thinks they’ll raise rates relatively quickly and maybe even decrease rates next year,” Self added.

“Well, I think the bond market is usually right.”

MAJOR INDEXES

On Wall Street, major indexes reversed early session losses and ended higher, driven partly by upbeat sales forecast from networking giant Cisco Systems (CSCO) that helped to lift the technology sector. Equities in industrials and energy sectors were also among the top gainers.

The Dow Jones Industrial Average rose 0.06% to 33,999.04, the S&P 500 gained 0.23% to 4,283.74 and the Nasdaq Composite added 0.21% to 12,965.34.

Oil prices gained nearly 3% as robust US fuel consumption data and an expected drop in Russian supply later in the year offset concerns that slowing economic growth could undercut demand.

Brent futures rose 3.09% to settle at USD 96.59 a barrel, while US West Texas Intermediate (WTI) crude rose 2.7% to USD 90.50.

The US dollar index surged to a one-month high after the comments from the Fed officials reaffirming the need for further rate hikes.

The dollar index rose 0.797%, with the euro up 0.01% to USD 1.0089.

Gold reversed earlier gains and was lower on a firmer dollar, as investors looked for more economic cues that could influence rate hikes. Spot gold dropped 0.2% to USD 1,758.20 an ounce, while US gold futures fell 0.28% to USD 1,755.40 an ounce.

(Reporting by Chibuike Oguh in New York; Editing by David Holmes and Matthew Lewis)

Dollar jumps as Fed officials say more rate hikes needed

NEW YORK, Aug 18 (Reuters) – The US dollar index surged to a one-month high on Thursday as Federal Reserve officials spoke of the need for further rate hikes, and investors reevaluated Wednesday’s minutes from the US central bank’s July meeting as being more hawkish than originally thought.

The Fed needs to keep raising borrowing costs to bring high inflation under control, a string of US central bank officials said on Thursday, even as they debated how fast and how high to lift them.

St. Louis Fed President James Bullard said he is leaning toward supporting a third straight 75-basis-point interest rate hike in September.

San Francisco Fed President Mary Daly said hiking rates by 50 or 75 basis points next month would be a “reasonable” way to get short-term borrowing costs to “a little bit above” 3% by the end of this year, and on their way to a little bit higher in 2023.

“The Fed’s rhetoric has been very steadfast from almost everybody – we’re got to raise rates, we’ve got to raise rates, rates are going higher,” said Joseph Trevisani, senior analyst at FXStreet.com in New York.

The dollar pared gains on Wednesday after the Fed’s July meeting minutes showed central bank officials were concerned they could raise rates too far in their commitment to get inflation under control, which was interpreted as modestly dovish.

The minutes also flagged an important dimension of the Fed’s debate in coming months: when to slow down the rate increases.

But analysts said it was wrong to focus on these parts of the minutes instead of the overriding view that rates need to keep heading higher.

“Except for the part about slower pace of rate hikes, the rest of the minutes read very hawkish,” Win Thin, global head of currency strategy at Brown Brothers Harriman, said in a report.

The dollar index was last up 0.71% at 107.39, after reaching 107.57, the highest since July 19.

The euro reached USD 1.0078, the weakest since July 18. The dollar gained to 135.90 against the yen, the weakest level for the Japanese currency since July 28.

Sterling slipped as far as USD 1.1920 the lowest since July 22.

The odds of a 75 basis-point hike in September have dropped to 42% since the meeting minutes, from 52% earlier on Wednesday, with a 50 basis-point hike now assigned a 58% probability.

However, consumer price inflation and jobs data for August, due before the Fed’s September meeting, will likely affect the size of a rate hike.

The September meeting will also offer new information on how far Fed officials expect rates to rise. Traders see the benchmark rate peaking at 3.66% in March.

Trevisani said he expected the Fed to go up to around 4%, adding that even that is unlikely to be enough to tame prices rising at an annual pace of 8.5%.

Data on Thursday showed the number of Americans filing new claims for unemployment benefits fell last week and the prior period’s data was revised sharply lower, while a separate report from the Philadelphia Fed on Thursday revealed a measure of employment at factories in the Mid-Atlantic region surged in August.

A report from the National Association of Realtors, however, showed existing home sales dropped 5.9% to a seasonally adjusted annual rate of 4.81 million units in July, the lowest level since May 2020.

(Additional reporting by Alun John in Hong Kong; Editing by Tomasz Janowski and Richard Chang)

Gold ticks lower as dollar strength dulls appeal

Aug 18 (Reuters) – Gold prices eased on Thursday under pressure from a firmer dollar although losses were capped by a dip in Treasury yields, while investors looked for more economic cues that could influence rate hikes.

Spot gold fell 0.2% to USD 1,758.42 per ounce by 2:18 p.m. EDT (1818 GMT), having slipped to USD 1,759.17 on Wednesday, its lowest since Aug. 3. US gold futures settled down 0.3% at USD 1,771.2 per ounce.

Investors continued to digest minutes from the US Federal Reserve’s July meeting released the previous day. The minutes showed more rate hikes were in the pipeline, but also signalled Fed officials had begun to more explicitly acknowledge the risk they might go too far and curb economic activity.

TD Securities commodity strategist Daniel Ghali said lower US Treasury yields could be driving the marginal uptick in non-interest bearing bullion, with rate hikes largely priced in.

But the Fed could push back against the idea the rate hike cycle may come to an end at the coming Jackson Hole Symposium, as “it is too early to declare victory against inflation,” Ghali added.

The dollar hit a three-week high, making gold – which is priced in the currency – more expensive for overseas buyers.

Assuming the Fed will fight inflation without pushing the economy into recession, safe-haven demand will fade further, causing gold to move gradually lower on a medium to longer-term horizon, said Carsten Menke, Head Next Generation Research at Julius Baer.

Meanwhile, US weekly jobless claims dipped as the labor market remained resilient.

The Fed’s Mary Daly, meanwhile, said either a half or 75-basis-point interest-rate hike in September would be “reasonable”.

In the physical markets, Swiss gold exports to top consumer China in July rose to their highest since December 2016.

Spot silver fell 1.7% to USD 19.513 per ounce, platinum fell 1.2% to USD 912.88 and palladium rose 0.4% to USD 2,150.02.

(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Krishna Chandra Eluri, Kirsten Donovan)

Meme stock Bed Bath & Beyond sinks after investor Cohen’s exit

Aug 18 (Reuters) – Bed Bath & Beyond Inc. (BBBY) shares tumbled 35% after the bell on Thursday as billionaire investor Ryan Cohen exited the struggling home goods retailer by selling his stake following a stunning rally in the meme stock this month.

Cohen’s RC Ventures was the second largest investor in the company. The venture capital firm said in a regulatory filing that it has no stake as of Aug. 16.

The billionaire declined to comment on further queries.

The company’s shares were down at USD 12.27 in after-hours trading. After gaining nearly 360% this month, the share price had risen to USD 30 in the previous session when the rout began after RC Ventures said it aims to sell 9.45 million shares, worth USD 148.6 million.

It also included the sale of its January call options with strike prices between $60 and $80.

When Cohen’s firm first disclosed the bullish bet on Tuesday, it boosted retail investor interest and resulted in record trading in the stock.

Brokerage Wedbush downgraded the stock to “underperform” and reaffirmed its price target of USD 5, saying the stock looks “disconnected from fundamentals” at the current valuation.

“News that Ryan Cohen may be selling his stake in BBBY appears to have spooked the meme stock faithful,” said David Jones, strategist at Capital.com.

“Unlike the frenzy of the past, (retail) traders seem more inclined to follow institutional wisdom than to blindly battle for companies with poor fundamentals.”

The retailer had in June ousted its chief executive and reported a slump in sales. It had in March added three directors in an agreement with Cohen, who is also the chairman of GameStop.

However, a stock market rebound has rekindled speculative options trading in single stocks among retail investors after volatile markets turned them away from risky bets earlier this year.

So far in August, the sharp run-up in Bed Bath & Beyond shares had burnt a more than $600-million hole in the pockets of those who had bet against the stock, S3 Partners said on Wednesday.

But short interest has increased to 55% of the company’s free float as bearish investors managed to find attractive entry points, the analytics firm said. Its ticker was trending high on investor-focused social media platform, stocktwits.com.

(Reporting by Medha Singh, Aishwarya Nair and Anisha Sircar in Bengaluru; Editing by Vinay Dwivedi and Arun Koyyur)

Philippine central bank hikes rates by 50 bps, keeps hawkish view

MANILA, Aug 18 (Reuters) – The Philippine central bank raised its benchmark interest rates by half a percentage point on Thursday, as expected, and kept the door open for further hikes to bring inflation back within its target range.

The Bangko Sentral ng Pilipinas (BSP) lifted the overnight reverse repurchase facility rate to 3.75%, as predicted by most economists in an Aug. 8-15 Reuters poll.

The rates on the overnight deposit and lending facilities were raised by 50 basis points to 3.25% and 4.25%, respectively.

“The Monetary Board deemed further monetary action to be necessary to anchor inflation expectations and avoid a further breach in the inflation target over the policy horizon,” BSP Governor Felipe Medalla told reporters.

The BSP, which has raised rates by a total of 175 basis points this year, remains committed to “take all necessary actions to steer inflation towards a target-consistent path over the medium term”, Medalla added.

Philippine inflation, which hit a near four-year high of 6.4% last month, averaged 4.7% in January to July, above the BSP’s 2%-4% target band for the year.

Adding pressure through imported inflation, the Philippine peso has fallen nearly 9% this year against the dollar – the third worst performer among Asian currencies.

The BSP lifted its 2022 average inflation forecast to 5.4% from 5.0%. However, it lowered the average inflation forecast to 4.0% from 4.2% for 2023, and to 3.2% from 3.3% for 2024.

Despite the domestic economy’s slowdown in the second quarter, when inflation hurt consumer spending, Medalla said overall domestic demand conditions have generally held firm, supported by improved employment numbers and ample liquidity.

Ten out of 16 economists in the Aug. 8-15 Reuters poll forecast another 25 bps basis points hike at the September meeting, taking rates to 4.00%, where they were before the COVID-19 pandemic.

Seven economists forecast rates would reach 4.25% or higher by end-2022, six expected rates to reach 4.00%, while the remaining three said rates would be 3.75% or lower.

(Reporting by Neil Jerome Morales, Karen Lema and Enrico Dela Cruz; Editing by Himani Sarkar)

European shares slip ahead of inflation data

Aug 18 (Reuters) – European shares edged lower in choppy trading on Thursday after a European Central Bank (ECB) board member hinted at another large rate hike next month even as recession risks harden, with focus on regional inflation figures for July due later in the session.

The continent-wide STOXX 600 was down 0.1%, hovering near one-week lows.

Miners and banks led losses, while energy stocks rose 0.4% as crude prices held steady.

The euro zone inflation outlook has failed to improve since the 50 basis point rate hike in July, ECB board member Isabel Schnabel said, suggesting she favours another big interest rate increase next month.

On Wednesday, the Federal Reserve’s July meeting minutes offered little comfort over the pace of US interest rate hikes.

Focus is now on euro zone consumer price inflation readings for July due at 0900 GMT.

Among stocks, Geberit (GEBN.S) fell 3.4% after saying its quarterly profit fell by a fifth as the Swiss plumbing supplies maker was hit by steep price rises.

Adyen (ADYEN.AS) was among the biggest decliners, plunging 13.6% after the Dutch payment processor posted results for the first half of the year.

(Reporting by Anisha Sircar in Bengaluru; Editing by Sriraj Kalluvila)

Japanese stocks see second straight week of foreign inflows

Aug 18 (Reuters) – Foreigners were net buyers of Japanese stocks for a second straight week in the week ended August 12 as risk-on buying kicked in after a cooling US inflation raised hopes that the Federal Reserve might slow the pace of interest rate increases.

Overseas investors bought Japanese stocks worth a net JPY 393.85 billion (USD 2.91 billion) last week, marking their biggest weekly purchase since July 22, data from exchanges showed.

They purchased JPY 122.9 billion in cash equities and acquired JPY 270.95 billion worth of derivatives, in a fourth straight week of net buying.

Last week, fears about red-hot US inflation eased as data showed that consumer prices were unchanged in July compared with June, which raised hopes that inflation would have already peaked.

Japanese top equities’ benchmarks — the Nikkei share average and the Topix index — both gained about 1.3% last week, posting a second straight weekly rise.

The Nikkei index hit a more than seven-month high of 29,222.77 earlier this week, as a rally on Wall Street and a fresh set of robust corporate earnings domestically boosted sentiments.

Meanwhile, Japanese bonds lost a net JPY 289.4 billion in cross-border outflows in the week, that marked the first weekly net selling in seven weeks, by outsiders.

Non-Japanese bonds drew a net JPY 1.09 trillion worth of funds from Japan, although equities saw disposals, worth JPY 234.8 billion, in a second subsequent week of net selling.

(USD 1 = JPY 135.2100)

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; editing by Uttaresh.V)

US retail traders pile back into options as meme-stock mania flares

NEW YORK, Aug 18 (Reuters) – Speculative options trading is on the rise again among individual investors alongside a rally in so-called meme stocks, reviving a trend that swept Wall Street last year but faded as markets turned volatile in 2022.

Trading in single stock options – a popular vehicle for retail investors looking to place leveraged bets in hopes of outsized gains – has shot higher in recent weeks, with 10-day average daily trading volume at a more-than six-month high of nearly 25 million contracts, Trade Alert data showed.

The rise in options trading comes amid wild rallies in the shares of companies popular with retail investors, led by Bed, Bath & Beyond BBBY.O, whose stock is up about 360% this month. More seasoned meme-stock names such as GameStop GME.N and AMC Entertainment AMC.N have surged as well, rising 19% and 47% respectively month-to-date. The S&P 500 .SPX is up 3.5% so far in August and has rallied nearly 17% from its June lows.

“It’s clear that individual investors are re-engaged in options trading,” said Steve Sosnick, chief strategist at Interactive Brokers.

“Certainly a disproportionate amount of the growth is in highly speculative names, meme stocks and the like.”

Shares of many smaller or less profitable companies were hit hard in the first half of the year, when worries over surging inflation and a hawkish Federal Reserve dried up risk appetite and dealt the S&P 500 its worst first half loss since 1970.

The recent pickup in options trading is one sign that risk appetite among retail investors may be returning, although volumes are still down some 24% from a peak hit last November.

On Wednesday, Bed Bath & Beyond was the second-most actively traded single-stock name with 1.4 million options contracts changing hands, topping market behemoths such as Tesla (TSLA) and Amazon.com (AMZN).

The focus on Bed Bath & Beyond grew after a regulatory filing showed on Aug. 16 that activist investor and GameStop Chairman Ryan Cohen took a large bullish options positions in the retailer’s shares.

Bed Bath & Beyond shares closed up nearly 12% on Wednesday but fell sharply in after-hours trading, after a late filing showed RC Ventures, owned by Cohen, filed a notice with the U.S. SEC for the proposed sale of 9.45 million shares, including options.

Other stocks popular with retail traders have also drawn increased interest in recent weeks, though not to the same extent. AMC daily options volume, for instance, stands at about 64,000 contracts month-to-date, up 60% from the average for the rest of the year.

The rise in retail options trading has been accompanied by increased engagement in social media platforms where meme stocks are discussed, according to data from VandaTrack, another sign that individual investors are growing bolder.

Still, many market watchers have been skeptical of the rallies, noting that past rebounds in meme stocks have fizzled, particularly a run in the first half of the year that was followed by new lows in broader markets.

“It’s the dog days of summer and we have had a little bit of easing of volatility,” said Garrett DeSimone, head quant at OptionMetrics. “I wouldn’t say it is a total change in risk aversion.”

Dan Pipitone, chief executive of retail brokerage TradeZero, noted that a surge in call buying is often viewed as a contrarian signal that points to a near-term top in markets.

Much depends on whether the bounce that has taken broader markets higher starts to fade, said Sosnick, of Interactive Brokers.

“If we start to go down in a meaningful way, particularly if we re-test the lows, that would mean the greed would revert to fear,” he said.

(Reporting by Saqib Iqbal Ahmed; Editing by Ira Iosebashvili and Richard Pullin)

Oil prices hold steady as recession worries offset lower US stocks

Aug 18 (Reuters) – Oil prices were little changed on Thursday as investors grappled with falling stockpiles in the United States, rising output from Russia and worries about a potential global recession.

Brent crude LCOc1 futures climbed 10 cents, or 0.1%, to $93.75 a barrel by 0347 GMT. U.S. crude futures gained 10 cents, or 0.1%, to $88.21 a barrel.

Prices rose more than 1% during the previous session, although Brent touched its lowest level since February.

Futures have fallen over the past few months, as investors have pored over economic data that has spurred concerns about a potential recession that could hurt energy demand.

British consumer price inflation jumped to 10.1% in July, its highest since February 1982, intensifying a squeeze on households.

The oil market remains in a multi-year tightening cycle, RBC Capital’s Mike Tran said, adding that investors are in search of near-term upside catalysts.

“The recession fears are well acknowledged, but the bullish catalysts such as the return of China or supply degradation from Russia remain elusive,” he added.

China’s refining output remained lacklustre in July as strict COVID-19 lockdowns and fuel export controls curbed production.

In supply, Russia has started to gradually increase oil production after sanctions-related curbs and as Asian buyers have increased purchases, leading Moscow to raise its forecasts for output and exports until the end of 2025, an economy ministry document reviewed by Reuters showed.

Russia’s earnings from energy exports are expected to rise 38% this year partly due to higher oil export volumes, according to the document, in a sign that supply from the country has not been affected as much as markets originally had expected.

U.S. crude stocks fell by 7.1 million barrels in the week to Aug. 12, Energy Information Administration (EIA) data showed, against expectations for a 275,000-barrel drop, as exports hit 5 million barrels a day, the highest on record.

Saudi Arabia’s crude oil exports rose in June, while output increased to a more than two-year high, data from the Joint Organizations Data Initiative (JODI) showed on Wednesday.

Meanwhile, the market is awaiting developments from talks to revive Iran’s 2015 nuclear deal with world powers, which could eventually lead to a boost in Iranian oil exports.

Iranian crude exports could climb for a third straight month in August, buoyed by Chinese demand as Russian oil becomes more expensive, data firms tracking the flows said.

(Reporting by Florence Tan in Singapore and Stephanie Kelly in New York; editing by Richard Pullin)

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