Gold slips as dollar resumes rally, bond yields rise

Sept 6 (Reuters) – Gold prices on Tuesday slipped from a one-week high hit earlier in the session as the dollar and Treasury yields climbed amid expectations for aggressive monetary policy tightening by major central banks.

Spot gold fell 0.6% to USD 1,699.70 per ounce by 3:02 p.m. ET (1902 GMT), after hitting its highest since Aug. 30 at USD 1,726.49 in the Asia trading session.

US gold futures settled down 0.6% at USD 1,712.9.

Focus this week will be on the European Central Bank meeting on Thursday, where it is expected to deliver a 75-basis-point interest rate hike.

Fed fund futures are now pricing in a 73% chance of a 75-basis-point rate hike by the US Federal Reserve at its Sept. 20-21 policy meeting.

“Few forces pressuring the market, all of which have to do with the outlook for monetary policy across the world over the next year,” said Daniel Ghali, commodity strategist at TD Securities.

The dollar jumped to a two-decade high after data showed the US services industry picked up again in August, making gold more expensive for overseas buyers.

Benchmark US Treasury yields rose to their highest levels since June on expectations that the Fed will keep hiking interest rates. Higher yields raise the opportunity cost of holding non-yielding gold.

“Gold has been dragged lower by the dollar and rising bond yields. In this environment with those two outside markets doing what they’re doing, it’s pretty hard for gold to sustain any kind of rally,” said Bob Haberkorn, senior market strategist at RJO Futures.

“We could see some bargain hunting that comes in here at these levels. That should keep a floor on this market. However, don’t see substantial upside move here that sometimes people are looking for in times of uncertainty.”

Spot silver fell 1.2% to USD 17.95 per ounce, platinum rose 0.5% to USD 850.21 while palladium dropped 2% to USD 1,992.95.

(Reporting by Brijesh Patel in Bengaluru; Editing by Vinay Dwivedi and Shounak Dasgupta)

Euro, sterling bounce on energy policy hopes, climb all over tumbling yen

SINGAPORE/LONDON, Sept 6 (Reuters) – The euro and sterling were on Tuesday trying to recover from multi-year lows against the dollar hit the day before, as policy makers tried to get a grip on the energy crisis, though the rate sensitive Japanese yen slipped to a new 24 year-low.

The pound and euro both gained over 0.6% with the pound reaching as high as USD 1.19609, and the euro USD 0.9987 up from its 20-year low hit on Monday.

“That governments are working on price caps, support for the consumer and really trying to get a grip on the energy crisis helps set a floor on those two pairs,” said Samy Chaar, chief economist Lombard Odier.

“Also, on the other side we have better news for the euro and cable from looking at the US dollar. Maybe there is a bit less inflation pressure in the US and so maybe we are at the start of the beginning of the Fed adjusting its strategy to stay at a restrictive level rather than hiking ever more.”

Britain’s incoming Prime Minister Liz Truss is considering a freeze on household energy bills to try to avert a winter cost-of-living crisis for millions of households, Reuters reported on Monday.

EU ministers will meet on Sept. 9 to discuss urgent bloc-wide measures to respond to a surge in gas and power prices that is hammering Europe’s industry and hiking household bills, after Russia curbed gas deliveries to the bloc.

Russia has halted gas flow along the Nord Stream 1 pipeline to Germany indefinitely, at first blaming an oil leak at a compressor station but since linking the stoppage to sanctions imposed by the west.

Gazprom’s deputy chief executive Vitaly Markelov told Reuters on Tuesday that the pipeline will not resume shipments until Siemens Energy repairs faulty equipment.

Elsewhere, the yen continued to tumble, with the dollar gaining 0.7% on the Japanese currency to 141.56 yen a new 24-year peak.

Moves in other crosses were even more stark. The euro climbed a stonking 1.2% to 141.2 yen and sterling gained 1.4% to 163.92 yen.

“After we saw the break of 140 (for dollar/yen) … the momentum definitely was skewed for yen weakness,” said Galvin Chia, an emerging markets strategist at NatWest Markets.

“So long as (yield curve control) is in play, and so long as interest rate divergence is in place, one of those side effects would be a weaker yen.”

The Bank of Japan is intervening in markets to keep yields on government bonds pinned down, which means the yen is sensitive to gains in yields elsewhere.

The US benchmark 10-year yield was last at 3.2576% up from Friday’s close of 3.191%. US markets were closed on Monday for a holiday.

The Aussie was little changed after the Reserve Bank of Australia raised its cash rate by 50 basis points and was last down a touch at USD 0.6782.

The RBA board signalled further rate hikes to come but noted that it is not on a pre-set path.

Elsewhere in Asia, Chinese authorities have sought to slow the yuan’s recent depreciation and late on Monday cut the foreign exchange reserve requirement ratio (RRR), freeing up dollars for banks to sell.

The move had only a limited effect on the exchange rate, with the yuan slipping to a fresh two-year low of 6.9590 in offshore trade.

(Reporting by Rae Wee, Editing by Shri Navaratnam, Sam Holmes and Ed Osmond)

Euro zone bonds yields higher again as rate hike unease lingers

LONDON, Sept 6 (Reuters) – Euro zone government bond yields rose on Tuesday, with sentiment staying bearish against a backdrop of uncomfortably high inflation that increases the prospects for another aggressive rate hike from the European Central Bank this week.

There was little in the way of key data on Tuesday, so the focus remains on the energy crisis and Thursday’s ECB meeting.

Money markets have priced in an almost 90% chance of a supersized 75 basis-point hike from policymakers trying to get on top of soaring inflation.

Markets also anticipate a further hike worth at least 50 bps at the ECB’s October meeting as investors position for front-loaded rate increases before the economic outlook deteriorates further due to the energy shock.

Bond yields jumped on Monday, led by a rise in the Italian 10-yield towards 4%, after Russia’s decision to keep its main gas pipeline to Germany shut exacerbated inflation and ECB rate-hike fears.

In early Tuesday trade, the Italian 10-year yield was 3 bps higher at 3.97%, while the German 10-year yield climbed 4 basis points to 1.60% holding near recent highs.

“There is definitely an expectation for a 75 bps rate hike from the ECB week and also in the UK, we have BoE (Bank of England) members reinforcing the need to fight inflation,” said Pooja Kumra, senior European rates strategist at TD Securities, explaining the selloff in bond markets.

The Bank of England should be prepared to raise rates rapidly to reduce the likelihood that it will need to squeeze the economy for an extended period to bring down inflation, BoE policymaker Catherine Mann said late on Monday.

“We also have supply, so there’s not much in favour of rates right now,” added Kumra.

Italy’s Treasury started marketing a new green government bond via a syndicate of banks on Tuesday, in a deal closely watched by the market against a backdrop of a looming snap election and new ECB tightening.

France, meanwhile, started the sale of a 20-year syndicated bond, according to a lead manager memo seen by Reuters.

US markets reopen after Monday’s public holiday, with a rise in US Treasury yields pushing higher in London trade.

(Reporting by Tommy Reggiori Wilkes; additional reporting by Dhara Ranasinghe and Yoruk Bahceli, editing by Ed Osmond)

Asian stocks flat as investors await more rate action

HONG KONG, Sept 6 (Reuters) – Asian shares largely wiped out morning gains on Tuesday afternoon, as investors remained cautious ahead of a European Central Bank meeting this week while also watching out for fallout from Russia’s gas cut.

US stocks are set to open higher on Tuesday after Monday’s Labor Day recess, with E-mini futures for the S&P 500 index ESc1 up 0.31%.

FTSE futures however were down 0.2%, indicating a choppy start in London. European stock indexes fell on Monday, the euro dropped below 99 cents for the first time in twenty years and European gas prices surged after Russia said its main gas supply pipeline to Europe would stay shut.

MSCI’s gauge of Asia-Pacific stocks outside Japan was up 0.02% at 0532 GMT. Japan’s Nikkei 225 was 0.03% higher.

China’s benchmark CSI300 Index rose 0.58%, after the country’s policymakers pledged on Monday to make renewed efforts to boost the COVID-hit economy. Hong Kong’s benchmark Hang Seng Index, however, slid 0.07%.

The yuan also rebounded from a more than two-year low against the US dollar, after the central bank said it would cut the foreign exchange reserves ratio to support the currency.

“Bulk commodities will be dependent on the impact of Chinese stimulus and the success of this will be reflected in the major miners,” said John Milroy, an investment adviser at Ord Minnett.

Australia’s S&P/ASX 200 fell 0.36%, after the Reserve Bank of Australia (RBA) expectedly increased the cash rate by 50 basis points.

The European Central Bank will meet on Thursday to discuss interest rate actions. A US Federal Reserve meeting will follow on Sept. 21.

“Soaring inflation will likely see the ECB deliver another outsized rate hike this Thursday,” said analysts from the Commonwealth Bank of Australia.

European energy ministers are set to discuss measures to curb power prices when they hold an emergency meeting on Friday.

“There is a feeling that the next 75 bp hike in September will see a deceleration afterwards,” said Sean Darby, Hong Kong-based global head of equity strategy for Jefferies.

Oil prices slipped on Tuesday, paring the previous session’s 3% gain, as a deal among members of the OPEC+ group to cut output by 100,000 barrels per day in October was seen as a largely symbolic move to stem the market’s recent slide.

Brent crude futures fell 0.7% to USD 95.07 a barrel, widening morning losses. US crude futures however were still up 2.12% at USD 88.71 a barrel.

Spot gold rose 0.49% to USD 1,718.2 an ounce.

The dollar index inched down 0.06% after touching a 20-year peak in the previous session.

(Reporting by Kane Wu in Hong Kong; Editing by Bradley Perrett)

Philippines rejects all bids for 2026 T-bond re-issue

MANILA, Sept 6 (Reuters) – The Philippines’ Bureau of the Treasury rejected all bids for its offer of 35 billion pesos ($615 million) worth of 2026 T-bonds at an auction on Tuesday.

* Tenders total 40.732 billion pesos

* Details on the BTr’s website www.treasury.gov.ph

($1 = 56.9300 Philippine pesos)

(Reporting by Enrico Dela Cruz; Editing by Kim Coghill)

Gold firms as dollar rally pauses, safe-haven demand rises

Sept 6 (Reuters) – Gold prices rose on Tuesday as a pause in the US dollar rally and energy crisis in Europe drove some investors towards the safe-haven bullion.

Spot goldrose 0.5% to USD 1,718.30 per ounce as of 648 GMT. Prices earlier rose nearly 1% to a one-week high.

US gold futures GCv1 gained 0.4% to USD 1,729.40.

The dollar index inched 0.1% lower but was not far from a 20-year peak scaled in the previous session.

“There’s been a bit of a safe-haven buying emanating out of this sort of burgeoning energy crisis in Europe,” said ANZ senior commodity strategist Daniel Hynes.

However, “it’s probably going to be a struggle to maintain any upward move considering the hawkish Fed (Federal Reserve) that we’ve got.”

An indefinite halt of the Nord Stream 1 gas pipeline, Europe’s major supply route, has intensified fears of a recession in the region, with consumers hurt by soaring energy prices.

A survey on Monday also showed the euro zone is almost certainly entering a recession with a deepening cost-of-living crisis and a gloomy outlook.

Investors now eye the European Central Bank’s rate action when it meets on Thursday, while a hefty interest rate hike is also expected from Fed’s Sept. 20-21 policy meet.

Even though gold is seen as a hedge against inflation and economic uncertainties, higher US interest rates increase the opportunity cost of holding the non-yielding bullion and boosts the dollar.

“What could come to its (gold’s) rescue is weaker macro data (the August jobs number helped) and lower inflation readings… But until that happens, rallies remain vulnerable,” Edward Meir, an analyst with ED&F Man Capital Markets said in a note.

“We see a USD 1,650-USD 1,775 trading range prevailing.”

Meanwhile, a government source told Reuters, India’s gold imports in August halved from a year ago.

Spot silver jumped 1.1% to USD 18.36 per ounce, platinum was 0.7% higher at USD 851.25 and palladium gained 1.6% to USD 2,065.96.

(Reporting by Eileen Soreng in Bengaluru; editing by Uttaresh.V)

Oil steadies after rally on symbolic OPEC+ output cut

LONDON, Sept 6 (Reuters) – Oil steadied on Tuesday after a two-day rally as OPEC+’s decision to cut output in October was balanced by concern about a weak economic outlook and the prospect of more interest rate hikes.

The Organization of Petroleum Exporting Countries and allies led by Russia, known as OPEC+, decided to cut output targets by 100,000 barrel per day after Saudi Arabia voiced concern about a slump in prices since June.

Brent crude LCOc1 was down 26 cents, or 0.3%, to USD 95.48 at 0815 GMT. US West Texas Intermediate (WTI) CLc1 inched up from Monday to USD 89.19, up USD 2.32 or 2.7% from Friday’s close. There was no settlement on Monday, the US Labor Day holiday.

“The decision to reverse the 100,000 barrel per day increase in September was more symbolic than fundamentally significant,” said Craig Erlam, analyst at brokerage OANDA. “But it will make traders think twice about driving prices lower in the way they have recently.”

As a result of the US holiday, weekly US inventory reports from the American Petroleum Institute and Energy Information Administration will be released on Wednesday and Thursday, a day later than usual.

Oil soared close to an all-time high of USD 147 in March after Russia’s invasion of Ukraine exacerbated supply concerns. Concern of a recession in the West, soaring inflation and interest rate hikes have since weighed.

The European Central Bank will meet on Thursday to discuss interest rate actions. A US Federal Reserve meeting will follow on Sept. 21.

Also lending oil some support were signs that an agreement to resurrect Iran’s nuclear deal with world powers was less imminent, delaying any return of around 1 million bpd of Iranian crude to the market.

The European Union’s foreign policy chief said on Monday he was less hopeful about a quick revival of the deal.

(Additional reporting by Sonali Paul in Melbourne and Isabel Kua in Singapore; editing by Jason Neely)

Oil sinks as demand fears take steam out of OPEC-led rally

NEW YORK, Sept 6 (Reuters) – Oil prices fell on Tuesday as concern returned about the prospect of more interest rate hikes and COVID-19 lockdowns weakening fuel demand, reversing a two-day rally on OPEC+’s first output target cut since 2020.

Brent crude settled at USD 92.83 a barrel, losing USD 2.91, or 3%. US West Texas Intermediate (WTI) fell from Monday’s trading to settle at USD 86.88 a barrel, up 1 cent from Friday’s close.

The US benchmark had been trading since Sunday without settlement due to the Labor Day holiday. WTI prices are down more than 2% from the usual time of settlement on Monday, Refinitiv Eikon data show.

“The OPEC+ news is now in the market and the focus has temporarily shifted to economic and inflationary concerns amongst which the two relevant factors are the extended COVID lockdowns in China and Thursday’s ECB rate decision,” said Tamas Varga of oil broker PVM.

China has eased some COVID-19 curbs but extended lockdowns in Chengdu, which added to worries that high inflation and interest rate hikes will hit oil demand. The European Central Bank is widely expected to lift rates sharply when it meets on Thursday.

A stronger US dollar, which was up about 0.6% on better-than-expected US services industry data, also put pressure on oil prices.

The reading on services sector activity fed into expectations that the Federal Reserve will keep raising interest rates, which could trigger a recession and bring down fuel demand.

“Basically, it’s all about tight supplies and concerns about an economic slowdown that might happen in the future,” said Phil Flynn, an analyst at Price Futures group in Chicago. “This has created a lot of uncertainty in the market.”

On the supply side, signs that an agreement to resurrect Iran’s nuclear deal with world powers was less imminent challenged crude prices by reducing the odds that OPEC+ would move forward with its output reduction plan, said Bob Yawger, director of energy futures at Mizuho.

The European Union’s foreign policy chief said on Monday he was less hopeful about a quick revival of the deal.

“You might not get an OPEC production cut if the Iranians don’t bring barrels to the market,” Yawger said.

The Organization of Petroleum Exporting Countries and allies led by Russia, known as OPEC+, decided on Monday to cut their October output target by 100,000 barrels per day (bpd). Prices rose on Friday ahead of the meeting and after the decision.

As a result of the Labor Day holiday, weekly US inventory reports from the American Petroleum Institute and Energy Information Administration will be released on Wednesday and Thursday, a day later than usual.

(Additional reporting by Alex Lawler in London, Sonali Paul in Melbourne and Isabel Kua in Singapore; Editing by Jason Neely, Mark Potter, Jonathan Oatis and Tomasz Janowski)

Philippine inflation slows, but more tightening expected

MANILA, Sept 6 (Reuters) – Philippine headline inflation slowed for the first time this year as the increase in food and transport costs eased, but a higher core inflation and weak currency would likely prompt the central bank to continue hiking interest rates.

The consumer price index (CPI) rose 6.3% in August, the Philippine Statistics Authority said on Tuesday. It matched the median forecast in a Reuters poll and was within the central bank’s projected range of 5.9% to 6.7% for the month.

Core inflation, however, which strips out volatile food and fuel items, accelerated to 4.6% from July’s 3.9%.

“The (Bangko Sentral ng Pilipinas) is prepared to take further policy actions to bring inflation toward a target-consistent path over the medium term,” the BSP said in a statement, adding upside risks continue to dominate the inflation outlook.

Inflation in the January-August period averaged 4.9%, exceeding this year’s BSP target band of 2% to 4%. The BSP expects inflation to average 5.4% this year, and ease to average 4.0% next year and 3.2% in 2024.

The BSP has raised interest rates by a total of 175 basis points this year, taking the benchmark overnight reverse repurchase facility rate to 3.75%, in efforts to bring inflation back within target and support a sagging peso.

The peso has further lost ground against the bullish dollar, however, hitting a record low of 56.99 on Monday, as the greenback surged ahead of the Federal Reserve’s widely expected interest rate hike later this month.

Ahead of the BSP’s Sept. 22 policy-setting meeting, its governor, Felipe Medalla, on Friday told a Reuters Newsmaker event the magnitude of a US rate hike will be a big factor in the BSP’s decision on whether to tighten policy further.

“We see the (Fed) decision to be the biggest influence on their (BSP’s) September meeting, as failure to keep up will translate to an even faster CPI surge,” said Emilio Neri, lead economist at Bank of the Philippine Islands.

(Reporting by Neil Jerome Morales; Editing by Martin Petty)

Philippines August inflation at 6.3% y/y

MANILA, Sept 6 (Reuters) – Philippine annual inflation eased to 6.3% in August PHCPI=ECI, slowing for the first time in six months as increments in food prices also slowed, the statistics agency said on Tuesday.

The headline figure, slower than July’s 6.4%, matched the median forecast in a Reuters poll. It was, however, within the central bank’s projected range of 5.9% to 6.7% for the month.

(Reporting by Neil Jerome Morales; Editing by Martin Petty)

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