Gold bounces back as dollar slips, economic risks grow

July 21 (Reuters) – Gold bounced off a one-year low on Thursday after gaining more than 1% as the dollar eased and persistent economic concerns boosted bullion’s safe-haven appeal.

Spot gold was up 1% at USD 1,712.61 per ounce by 1636 GMT, after hitting its lowest since March 2021 at USD 1,680.25.

US gold futures rose 0.6% to USD 1,711.00.

Helping gold’s uptick, the euro jumped against the dollar before paring gains. The European Central Bank raised interest rates by more than expected as inflation concerns trumped growth considerations, even as the euro zone economy reels from the Ukraine crisis.

The geopolitical risks over Ukraine, higher energy prices and massive amounts of debt are all driving buying interest in gold though, said Daniel Pavilonis, senior market strategist, RJO Futures.

The dollar retreated, making gold more attractive for overseas buyers.

But overall, gold has declined more than USD 380 since early March as the dollar’s recent rally added to headwinds from aggressive rate hikes, which decrease the opportunity cost of holding the non-yielding asset and dim its safe-haven lure.

“Gold remains caught between elevated inflation, growing concerns over a recession and a flight to quality on the one hand, but sharp rate hikes, a strong USD and seasonally weak demand on the other,” said Standard Chartered analyst Suki Cooper.

The US Federal Reserve is expected to raise rates by 75 basis points next week.

“The current rally would be short-lived as the Fed is expected to be pretty aggressive and the dollar might hold its strength,” said Chris Gaffney, president of world markets at TIAA Bank.

If the Fed signals they’re done with the real aggressive moves, we could see “an opportunistic rally in gold” but it will be pressured until then, Gaffney added.

Silver rose 0.7% to USD 18.78 per ounce, platinum gained 2% to USD 874.98, while palladium XPD= was up 1% at USD 1,880.48.

(Reporting by Arundhati Sarkar, Arpan Varghese and Ashitha Shivaprasad in Bengaluru; Editing by Krishna Chandra Eluri and Devika Syamnath)

Gulf bond hopefuls wait in the wings after first-half plunge in volumes

DUBAI, July 21 (Reuters) – Middle East companies waiting for a favorable window to sell bonds face some tough choices in terms of when to tap the market, a situation that has already contributed to an 80% plunge in issuance volumes in the region in the first half.

Some issuers in the Gulf, which typically makes up some 40% of emerging market bond sales, have pounced on windows of relative market stability to get deals done.

But many have shelved or delayed plans while they wait for lulls in market volatility driven by the Ukraine war and for clearer signals on the global economy.

That includes Saudi Arabia’s sovereign wealth fund PIF, which said last year it planned to debut in the market with green bonds. The Saudi government had also said it would issue green bonds while Qatar said it might tap the market opportunistically.

But none have gone ahead so far this year.

Potential issuers have to choose between paying the higher new issuance premiums now or cope with higher interest rates down the line.

“So you’re kind of stuck in a conundrum,” one debt banker in the region said. “Should I issue now and pay up the new issue premium or wait for lower new issue premium but high rates.”

In January, Abu Dhabi oil group ADNOC set up a new debt-issuing entity, but two bankers said the company will wait for better conditions to issue its first bonds.

ADNOC declined to comment.

Others, like an EIG-led consortium of investors in Saudi Aramco’s oil pipeline network, are actively monitoring the market and waiting for a window to issue, three bankers said.

The EIG-led consortium raised USD 2.5 billion in January, shy of the USD 3.5-4.4 billion sought due to choppy markets.

It will now have to take out a USD 10.8 billion loan over a longer timeline than the two or three deals originally planned, two of the bankers said.

A separate consortium, led by BlackRock (BLK), had bought a stake in Aramco’s gas pipelines network, backed by a USD 13.4 billion loan that will need to be refinanced via bonds.

The bankers said the two consortia could sell bonds in parallel rather than wait for the oil pipeline transactions to complete, coordinating via Aramco to ensure they do not take away demand from one another as both deals carry Aramco risk.

Aramco, EIG and BlackRock declined comment.

Meanwhile, Egypt has everything in place to issue dollar-denominated sukuk but significantly higher borrowing costs, and other options, have put that on ice, several sources with knowledge of the situation said.

Egypt’s finance minister, in media interviews in the last two months, said the country was also considering issuing bonds denominated in Chinese yuan.

Oman is also exploring bond options, including issuing dollar Islamic bonds or sukuk, two bankers said. Oman’s finance ministry did not respond to a request for comment.

“I think there’s a good mindset now where you don’t want to miss a window,” the debt banker in the region said. “And the smart move is to be ready and make sure you make best use of this window that’s going to come.”

One window late last month allowed a flurry of deals, including perpetual notes of USD 300 million by Dubai’s Mashreqbank MASB.DU, USD 400 million by Qatar Insurance and USD 500 million by retail operator Majid Al Futtaim. Saudi developer Dar Al Arkan issued USD 400 million in sukuk.

HIGH PREMIUMS

In the first half of the year, Gulf issuance volumes dropped to USD 15.3 billion, based on Refinitiv data, with 35 bond deals compared with 95 a year earlier.

The wider Middle East, where the Gulf makes up the bulk of issues, had 37 deals, down from 101, with volumes down 80%.

“New issue premiums were significantly higher than what they were accustomed to,” the debt banker said.

The region was paying between zero and five basis points on new issue premiums and now faces “anywhere between 10-15 basis points for the best credit, and… closer to 50 basis points for the more challenging credits,” the banker said.

The steep drop in issuance from the region was despite Gulf bonds outperforming broader emerging markets, shedding some 11% in the year to July 15, while EM bonds dropped around 18.5%, one bonds analyst said.

Gulf loan volumes fell 31% and Middle East volumes slipped 38% in the first half, based on Refinitiv data, showing bank debt was considerably more attractive to issuers as interest rates on loans take longer to adjust to the market.

(Reporting by Yousef Saba. Editing by Jane Merriman)

Dollar bulls hope Fed changes rate hike gear again

July 21 (Reuters) – US dollar bulls hope the Federal Reserve springs a surprise and raises interest rates by a larger-than-expected 100 basis points next week, as this could spur further greenback gains.

Only four out of 102 economists polled by Reuters forecast a 100-bps Fed hike on July 27. The other 98 expect an increase of 75 bps.

Interest rate futures currently suggest there is a 21% chance of the Fed raising rates by 100 bps on July 27, down from 86% last Thursday (24 hours after hotter than expected US June inflation data).

The Fed has changed gears twice since it kicked off its rate tightening cycle with a 25-bps increase in March, with May’s 50-bps hike followed by a 75-bps rise last month.

IMM speculators upped their net USD long position by USD 3.04 billion to USD 16.69 billion in the fortnight ended July 12 (ahead of the hot US inflation data).

(Robert Howard is a Reuters market analyst. The views expressed are his own)

BSP chief says no off-cycle policy action at Thursday meeting

MANILA, July 21 (Reuters) – The Philippine central bank was not considering another off-cycle policy action at a regular meeting of its policymaking Monetary Board on Thursday, Governor Felipe Medalla told Reuters.

When asked if the Bangko Sentral ng Pilipinas (BSP) was considering any policy action, Medalla replied “no” via a phone message. The BSP raised key interest rates by a hefty 75 basis points a week ago, making a surprise, more forceful move to curb inflation.

(Reporting by Karen Lema; Editing by Kanupriya Kapoor)

Oil prices slump as stockpiles, rate hikes stoke demand worries

LONDON, July 21 (Reuters) – Oil prices fell more than USD 3 on Thursday after higher US gasoline stockpiles stoked demand worries and returning energy supply from Libya and Russia eased supply concerns.

Brent crude futures dropped USD 3.80, or 3.6%, to USD 103.12 a barrel by 0915 GMT after slipping 0.4% in the previous session. US West Texas Intermediate crude futures fell USD 3.93, or 3.9%, to USD 95.95 a barrel following a 1.9% drop on Wednesday.

Oil futures trading volumes have been thin and prices volatile as traders have to square tighter supply because of the loss of Russian barrels following the country’s invasion of Ukraine, with recessionary worries about weaker energy demand.

The European Central Bank is set to join other central banks in hiking rates, focusing on fighting runaway inflation rather than the economic downturn, which, in turn, can weigh on oil demand. An announcement is due at 1215 GMT.

European stocks, which often move in tandem with oil prices, also dipped ahead of the rate decision.

US gasoline inventories rose 3.5 million barrels last week, government data showed on Wednesday, far exceeding analysts’ forecasts.

“US gasoline demand is struggling to shift into top gear during the peak summer driving season,” said PVM analyst Stephen Brennock.

Meanwhile, Libya’s National Oil Corp (NOC) said on Wednesday crude production had resumed at several oilfields, after lifting force majeure on oil exports last week.

On the natural gas front, Gazprom (GAZP) resumed flows via the Nord Stream 1 pipeline which supplies more than a third of Russian gas exports to the European Union.

Still, one of Canada’s major oil export arteries, the Keystone pipeline, was operating at reduced rates for a third day on Wednesday, operator TC Energy (TRP) said.

(Additional Reporting by Florence Tan in Singapore and Stephanie Kelly in New York; editing by Jason Neely)

Euro rebounds ahead of ECB hike, Russian gas restart; yen yawns at BOJ

TOKYO, July 21 (Reuters) – The euro rebounded on Thursday, rising back toward a two-week high to the dollar, as investors braced for the European Central Bank’s first interest-rate increase since 2011 and the scheduled reopening of a key Russian gas pipeline later in the day.

Meanwhile, the yen shrugged off the Bank of Japan’s as-expected decision to stick with ultra-easy policy settings.

The euro gained 0.3% to USD 1.02095, clawing back part of a 0.39% retreat on Wednesday, when it also hit an intraday peak of USD 1.0273, the highest since July 6.

The euro had enjoyed three sessions of strong gains this week on expectations the ECB might deliver a big 50 basis-point rate hike and a Reuters report that a key Russian gas pipeline would reopen on time following a 10-day maintenance shutdown.

The European Union asked member states on Wednesday to cut gas usage by 15% until March as an emergency step after President Vladimir Putin warned that Russian supplies sent via the biggest pipeline to Europe could be reduced further and might even stop.

Markets are split on whether ECB policymakers will deliver a previously telegraphed 25 basis-point increase or a half-point rise to try to wrestle down runaway inflation. The monetary authority is also likely to provide more details of a new tool aimed at controlling outsized rises in bond yields on Europe’s periphery.

The outlook for the region has been further complicated by the looming collapse of the Italian government.

National Australia Bank sees the ECB meeting having mixed implications for the euro.

“Italy’s political uncertainty complicates the ECB plans to deliver details on its new anti-fragmentation tool, especially regarding the conditions for the tool to be triggered,” and a lack of clarity is likely to drag on the euro, NAB currency strategist Rodrigo Catril wrote in a client note.

At the same time, NAB expects a half-point hike and guidance for another half-point increase in September “with the Bank aiming to front-load rate hikes ahead of weaker conditions later in 2022 and into 2023, when room to move may be more limited,” Catril said.

In Japan, the central bank continued to buck the global monetary tightening trend by keeping stimulus settings steady, even as it raised its inflation forecast.

The dollar inched up 0.05% to 138.34 yen, edging back in the direction of the 24-year high at 139.38 seen one week ago.

Sterling continued to consolidate below USD 1.20, last trading little changed at USD 1.1984, as the field of candidates vying to be Britain’s next prime minister shrank to two, but a winner is not expected to be announced until Sept. 5.

The Australian dollar AUD=D3 added 0.08% to USD 0.6895, while the New Zealand dollar slipped 0.1% to USD 0.6224.

(Reporting by Kevin Buckland; Editing by Sonali Desai)

Gold slips to near one-year low on looming rate hikes

July 21 (Reuters) – Gold prices fell on Thursday to their lowest in nearly a year, as prospects of more interest rate hikes by major central banks to combat soaring inflation weighed on bullion’s appeal.

Although gold is seen as a hedge against inflation, rising interest rates increase the opportunity cost of holding bullion, which pays no interest.

Spot gold was down 0.3% at USD 1,691.84 per ounce by 0313 GMT, after falling to its lowest since early August 2021 at USD 1,689.40 earlier in the session.

US gold futures fell 0.6% to USD 1,690.40 per ounce.

“Clearly inflation expectations are receding because the Fed and other central banks are embarking on aggressive tightening regime, which is undermining gold’s appeal,” said Ilya Spivak, a currency strategist at DailyFX.

The European Central Bank is set to raise interest rates for the first time in 11 years on Thursday, with a bigger-than-flagged move seen as increasingly likely as policymakers fear losing control of runaway consumer price growth.

The US Federal Reserve is widely expected to raise rates by 75 basis points at its policy meeting next week.

British inflation in June surged to a 40-year peak, bolstering chances of a half-percentage-point Bank of England rate hike next month.

“Gold broke below USD 1,700/oz as investors continue to reduce exposure to the sector ahead of central bank meetings,” ANZ analysts said in a note.

Indicative of sentiment, holdings of SPDR Gold Trust GLD, the world’s largest gold-backed exchange-traded fund, fell 0.3% to 1,005.87 tonnes on Wednesday, their lowest since January.

Capping gold’s losses, the US dollar slipped 0.3% against its rivals. A weaker greenback makes gold cheaper for holders of other currencies.

Market participants are also keeping a close watch on the resumption of gas flow along the biggest pipeline from Russia to Germany.

Elsewhere, spot silver fell 0.6% to USD 18.54 per ounce, platinum dipped 0.5% to USD 854.03, and palladium rose 0.3% to USD 1,867.20.

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

Oil prices edge lower as demand concerns outweigh tight supply

Oil prices fall for second session

U.S. crude stocks dip, gasoline builds as demand slackens – EIA

Canada Keystone export pipeline at reduced rates for third day

By Stephanie Kelly

July 21 (Reuters) – Oil prices fell on Thursday for a second straight session, as demand concerns outweighed tight global supply after U.S. government data showed tepid gasoline demand during the peak summer driving season.

Brent crude LCOc1 futures fell 37 cents, or 0.3%, to $106.55 a barrel by 0003 GMT. WTI crude CLc1 futures fell 33 cents, or 0.3%, to $99.55 a barrel.

Oil prices have been volatile as traders have had to square tighter global supply because of the loss of Russian barrels following the country’s invasion of Ukraine, with recessionary worries that could weaken energy demand.

U.S. gasoline inventories USOILG=ECI rose 3.5 million barrels last week, government data showed on Wednesday, far exceeding analysts’ forecasts in a Reuters poll for a 71,000-barrel rise. EIA/S

Product supplied of gasoline – a proxy for demand – was about 8.5 million barrels per day, or about 7.6% lower than the same time a year ago, the data showed.

“We expect Brent oil futures to fall to US$100/bbl by Q4 2022, implying a modest fall from current levels,” Commonwealth Bank commodities analyst Vivek Dhar said in a note.

In Libya, the National Oil Corp said crude production has resumed at several oilfields, after lifting force majeure on oil exports last week. nC6N2WQ00P

However, adding to supply concerns, one of Canada’s major oil export arteries, the Keystone pipeline, was operating at reduced rates for a third day on Wednesday, operator TC Energy TRP.TO said in a statement, as repairs continued on a third-party power facility in South Dakota. nL1N2Z11E3

(Reporting by Stephanie Kelly; editing by Richard Pullin)

((Stephanie.Kelly@thomsonreuters.com; 646-223-4471; Reuters Messaging: stephanie.kelly.thomsonreuters.com@reuters.net))

Wall Street closes higher boosted by tech stocks gains on upbeat earnings

July 20 (Reuters) – U.S. stocks ended higher on Wednesday with the tech-heavy Nasdaq booking a 1.6 % gain on positive earnings signals with a wary eye on inflation and more interest rate hikes by the Fed.

Netflix Inc’s (NFLX) shares added 7.4% after the company predicted it would return to customer growth during the third quarter, while posting a smaller-than-expected 1 million drop in subscribers in the second quarter.

Other high-growth stocks extended gains following the forecast from the streaming service provider. Shares of Apple Inc. (AAPL), Amazon.com Inc. (AMZN), Microsoft Corp. (MSFT) and Meta Platforms Inc. (META) rose between 1% and 4.2%.

Electric vehicle maker Tesla Inc. (TSLA) rose 2% in extended trading after reporting a rise in quarterly profit after the bell.

“Equity prices are trending in a roller coaster fashion, currently being at the mercy of inflation, interest rates and earnings,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management.

“We’re going to need another series of reporting cycles to confirm whether or not inflation indeed is getting under control.”

Analysts expect aggregate year-on-year S&P 500 profit to grow 5.9% in this reporting season, down from the 6.8% estimate at the start of the quarter, according to Refinitiv data.

Runaway inflation initially led markets to price in a full 100-basis-point hike in interest rates at the Fed’s upcoming meeting next week, until some policymakers signaled a 75-basis-point increase.

The Dow Jones Industrial Average rose 47.79 points, or 0.15%, to 31,874.84, the S&P 500 gained 23.21 points, or 0.59%, to 3,959.9 and the Nasdaq Composite added 184.50 points, or 1.58%, to 11,897.65.

Seven of the 11 major sectors of the S&P 500 gained ground, with consumer discretionary and information technology posting the biggest gains.

Trading remained volatile in thin volumes, with the CBOE Volatility index closed at 23.79 points to its lowest in nearly three months.

Volume on U.S. exchanges was 11.51 billion shares, compared with the 11.43 billion average for the full session over the last 20 trading days.

“Low volumes accentuate market moves historically and even though we’ve wiped off $10 or $15 trillion from global equities this year, there’s still a lot of excess liquidity. So low volume on excess liquidity can still accentuate moves,” John Lynch, chief investment officer for Comerica Wealth Management, said.

Baker Hughes Co. (BKR) tumbled 8.3% as the largest S&P percentage loser, as the oilfield services provider reported a bigger second-quarter loss, while its adjusted profit also missed estimates.

Advancing issues outnumbered declining ones on the NYSE by a 1.94-to-1 ratio; on Nasdaq, a 2.28-to-1 ratio favored advancers.

The S&P 500 posted one new 52-week high and 29 new lows; the Nasdaq Composite recorded 29 new highs and 38 new lows.

(Reporting by Echo Wang in New York and Shreyashi Sanyal in Bengaluru; Additional reporting by Aniruddha Ghosh in Bengaluru; Editing by Sriraj Kalluvila, Shounak Dasgupta and Lisa Shumaker)

Dollar rises vs euro as traders eye ECB rate decision

NEW YORK, July 20 (Reuters) – The US dollar rose against the euro on Wednesday in a choppy session, but its gains were capped as traders were hesitant to drive big moves ahead of a crucial European Central Bank policy decision on Thursday.

The single currency has rallied about 2% in the last three trading sessions on expectations the ECB might deliver a big 50-bps rate hike and a Reuters report that a key Russian gas pipeline would reopen on time after maintenance.

“The euro popped yesterday on the slight possibility that the ECB would consider a 50 basis point hike,” said John Doyle, vice president of dealing and trading at Monex USA.

“I think expectations of that have waned a bit this morning especially with the energy crisis back in the headlines.”

The European Union told member states on Wednesday to cut gas usage by 15% until March as an emergency step after President Vladimir Putin warned that Russian supplies sent via the biggest pipeline to Europe could be reduced further and might even stop.

Both events – the ECB meeting and the reopening of the Nord Stream 1 conduit after a 10-day shutdown – are due on Thursday, leaving markets on tenterhooks.

“Our expectation is the ECB will only hike 25 bps this month. But the chance of a upside surprise will keep EUR/USD choppy until the decision is released,” Doyle said.

The dollar was about 0.52% lower against the euro at USD 1.01675.

The common currency found little relief from selling pressure after Italian Prime Minister Mario Draghi won a confidence motion in the upper house Senate on Wednesday, but three main coalition parties refused to take part in the vote, effectively torpedoing his administration.

Against a basket of currencies, the dollar was 0.5% higher at 107.15, not far from the two-decade high of 109.29 touched last week.

The dollar was about 0.1% lower against the yen at 138.29 yen. The Bank of Japan is expected to stick to its dovish stance at its Thursday meeting.

Sterling weakened against the dollar, as data showed British inflation climbed to its highest rate in 40 years, but only slightly above forecast. Against the dollar, the pound was 0.3% lower at USD 1.1961.

The Canadian dollar slipped about 0.2% against the US dollar after data showed inflation in Canada picked up speed again in June, though the gain missed forecasts.

In cryptocurrencies, bitcoin was about 1.67% higher at USD 23,795.2, on pace for its third straight day of gains, as traders bet the recent bout of weakness that had engulfed the market was over.

(Reporting by Saqib Iqbal Ahmed; Editing by Alison Williams and Richard Chang)

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