Gold rises on softer dollar; market awaits further Fed guidance

Gold prices rose on Tuesday driven by a weaker dollar, with investors awaiting inflation data that might provide insights on the scale of an expected interest rate cut by the Federal Reserve next month.

Spot gold rose 0.3% to USD 2,524.94 per ounce, as of 2:57 p.m. ET (1857 GMT), shy of the record high of USD 2,531.60 hit last week. US gold futures settled 0.1% lower to USD 2,552.90.

The dollar index fell 0.3%, making gold more attractive for other currency holders.

“Biggest thing right now is the drop in the US dollar that we’ve seen over the last hour has given gold a little bit of a push here, and you’re seeing a lot of buying on this dip,” said Bob Haberkorn, senior market strategist at RJO Futures.

Investors now await the release of the Personal Consumption Expenditures (PCE) data, a key inflation report and the Fed’s preferred inflation gauge, scheduled for Friday.

A surprise of hotter-than-expected inflation data could slightly influence the Fed’s policy, but it is assured they will cut interest rates in September and possibly again this year, Jim Wyckoff, senior market analyst at Kitco Metals, said.

Traders see a 63.5% chance of a 25-basis-point (bp) rate cut in September and about a 36.5% probability of a bigger 50-bp reduction, according to the CME FedWatch tool.

Bullion remains above the USD 2,500 per-ounce psychological level and is heading for its best year since 2020, driven by investor optimism about upcoming US rate cuts and lingering concerns about the Middle East conflict.

“Much of the positive news for gold may therefore already have been priced in. We feel vindicated in our view that gold has no significant upside potential for the time being,” Commerzbank wrote in a note.

“We see more room for the three other precious metals that have not caught up with gold in recent weeks”

Among other metals, spot silver rose 0.6% to USD 30.07 per ounce, while platinum fell 0.1% to USD 960.90 and palladium gained 1.8% to USD 975.58.

(Reporting by Anushree Mukherjee in Bengaluru; Editing by Krishna Chandra Eluri and Mohammed Safi Shamsi)

Nvidia results could spur record USD 300-billion swing in shares, options show

NEW YORK – Traders in the US equity options market are expecting Nvidia’s upcoming earnings report to spark a more than USD 300 billion swing in the shares of the world’s most dominant artificial intelligence chipmaker.

Options pricing shows that traders anticipate a move of around 9.8% in the company’s shares on Thursday, a day after it reports earnings, data from analytics firm ORATS showed. That’s larger than the expected move ahead of any Nvidia report over the last three years and well above the stock’s average post-earnings move of 8.1% over that same period, according to ORATS.

Given Nvidia’s market capitalization of about USD 3.11 trillion, a 9.8% swing in the shares would translate to about USD 305 billion, likely the largest expected earnings move for any company in history, analysts said.

Such a move would dwarf the market capitalization of 95% of S&P 500 constituents, including Netflix and Merck, according to LSEG data.

The results from Nvidia, whose chips are widely seen as the gold standard in artificial intelligence, also have big implications for the broader market. The stock is up some 150% year-to-date, accounting for around a quarter of the S&P 500’s 18% year-to-date gain.

“It alone has been a huge contributor to the overall profitability of the S&P 500,” said Steve Sosnick, chief strategist at Interactive Brokers. “It’s the Atlas holding up the market.”

Options pricing suggests traders are more concerned about missing out on a large upside move from Nvidia than getting hurt by a large drop.

Traders are assigning a 7% chance the stock rises more than 20% by Friday, while only giving a 4% probability to a more than 20% sell-off, according to a Susquehanna Financial analysis of options data.

“(Ahead of earnings) people typically want to buy hedges, they want to buy insurance, but in Nvidia’s case, a lot of that insurance is FOMO insurance,” Sosnick said, referring to the popular acronym for “fear of missing out.”

“They don’t want to miss a rally.”

Part of the reason options traders are pricing this large a move for Nvidia has to do with how volatile the company’s shares have been in the past.

Nvidia’s average 30-day historical volatility this year – a measure of how much the stock has gyrated over a rolling 30-day period – is about twice the average of the same measure for all other companies with market caps higher than USD 1 trillion, according to a Reuters analysis of Trade Alert data.

“The options are just reflecting how the stock is actually moving,” said Christopher Jacobson, a strategist at Susquehanna Financial Group, which makes markets in the securities of Nvidia.

“(It’s) is just a function of continued uncertainty/optimism with regards to AI and the ultimate size of the opportunity coupled with NVDA having become such a widely followed stock among institutional and retail,” he said.

(Reporting by Saqib Iqbal Ahmed; Editing by Ira Iosebashvili and Jonathan Oatis)

Oil prices fall 2% on economic worries, technical decline

NEW YORK – Oil prices fell about 2% on Tuesday on worries that slower economic growth in the US and China could reduce demand for energy, especially after prices surged over 7% during the prior three days.

Brent futures fell USD 1.88, or 2.3%, to settle at USD 79.55 a barrel, while US West Texas Intermediate (WTI) crude fell USD 1.89, or 2.4%, to settle at USD 75.53.

“Today’s price pullback, although significant, still fell within the range of a normal and deserved correction following a substantial three-day USD 6-per-barrel advance,” analysts at energy advisory firm Ritterbusch and Associates said in a note.

Technical traders noted that prices of both contracts pulled back after failing to break above resistance around the 200-day moving averages on Monday.

With US gasoline futures RBc1 still trading near a six-month low, the 321-crack spread, which measures refining profit margins, held near its lowest level since February 2021 for a second day in a row.

“If the refiner is not making money on gasoline and distillate, then the refiner is going to buy less crude oil to make gasoline and distillate. The barrels he does not buy will get sent to storage,” Bob Yawger, director of energy futures at Mizuho, said in a note.

In the US, consumer confidence rose to a six-month high in August, but Americans are becoming more anxious about the labor market after the unemployment rate jumped to near a three-year high of 4.3% last month.

That increase in unemployment helped boost expectations the US Federal Reserve will cut interest rates next month. Lower rates can boost economic growth and demand for oil.

UBS Global Wealth Management sees a 25% chance of a U.S, recession, up from 20% previously, citing soft numbers in the July labor report.

In Germany, meanwhile, the economy shrank in the second quarter.

Goldman Sachs cut its average 2025 Brent forecast and range for prices by USD 5 per barrel, citing slower demand in China. The bank reduced its range for Brent prices to USD 70-USD 85 a barrel, and 2025 average Brent forecast to USD 77 per barrel from USD 82.

Worries about the economy in the US and China offset bullish news out of Libya and the Middle East that could reduce supplies.

Prices rose strongly over the past few days due to the potential shutdown of Libya’s oil fields that could curtail the OPEC member’s roughly 1.2 million barrels per day of output (some of which was already reduced), and other tensions in the Middle East following counterattacks between Israel and the Iran-backed Hezbollah group in Lebanon in recent days.

“The sense of dread in the Middle East seems to have dissipated after Israel thwarted a large-scale Hezbollah missile attack. … It is interesting to note that Iran did not step in to help defend … Hezbollah,” Yawger at Mizuho said.

US OIL INVENTORIES

Weekly US oil storage data is due from the American Petroleum Institute trade group on Tuesday and the US Energy Information Administration on Wednesday.

That data is expected to show that energy firms pulled crude from US storage last week for the eighth time in nine weeks.

Analysts, however, projected last week’s crude storage decline was just 2.3 million barrels during the week ended Aug. 23.

If correct, that withdrawal would be smaller than the decrease of 10.6 million barrels during the same week last year and an average decrease of 6.3 million barrels over the past five years (2019-2023).

(Reporting by Scott DiSavino in New York, Paul Carsten in London, Colleen Howe in Beijing, Emily Chow in Singapore, and Arunima Kumar in Bengaluru; Editing by David Goodman, Jonathan Oatis, and David Gregorio)

Gold drifts near record high amid Fed rate-cut optimism, geopolitical woes

Gold prices held steady on Tuesday, lingering near record highs, as safe-haven demand from rising geopolitical tensions in the Middle East and increasing bets on a US Federal Reserve interest rate cut in September provided support.

FUNDAMENTALS

* Spot gold was flat at USD 2,515.83 per ounce by 0027 GMT. Bullion hit a record high of USD 2,531.60 on Aug. 20.

* US gold futures fell 0.2% to USD 2,551.20.

* Israel issued new evacuation orders for Deir Al-Balah in the central Gaza Strip late on Sunday, forcing more families to flee, saying forces intended to act against militant group Hamas and others operating in the area.

* Gold is historically reputed for its stability as a favored hedge against geopolitical and economic risks.

* Meanwhile, San Francisco Federal Reserve President Mary Daly on Monday said, “the time is upon us” to cut interest rates, likely starting with a quarter-percentage point reduction in borrowing costs.

* Traders have fully priced in a Fed easing for next month, with a 70% chance of a 25-basis-point cut and about 30% chance of a bigger 50-bp reduction, according to the CME FedWatch tool.

* A low interest rate environment tends to boost non-yielding bullion’s appeal.

* Data from the Commerce Department on Monday showed that new orders for key US capital goods unexpectedly fell in July, with June’s figures revised lower, indicating a slowdown in business equipment spending into the third quarter.

* Gold demand in top consumers India and China is expected to improve in the next few months, industry officials said.

* Spot silver edged 0.2% lower to USD 29.85 per ounce, platinum fell 0.3% to USD 959.24 and palladium was flat at USD 958.50.

DATA/EVENTS (GMT)

0600 Germany GDP Detailed QQ SA Q2

0600 Germany GDP Detailed YY NSA Q2

1400 US Consumer Confidence August

(Reporting by Daksh Grover in Bengaluru; Editing by Rashmi Aich)

Japan’s Nikkei falls as Wall Street tech losses weigh

TOKYO – Japan’s Nikkei share average edged down in early trade on Tuesday, tracking overnight declines on Wall Street, dragged lower by technology stocks.

The Nikkei was down 0.5% at 37,936.68, as of 0009 GMT, while the broader Topix declined 0.2%.

The S&P 500 finished lower on Monday, with AI heavyweight Nvidia dipping ahead of its quarterly report this week. The tech-heavy Nasdaq also declined.

Japanese technology shares followed their US peers lower, with chip-related majors Tokyo Electron 8035.T and Advantest, which counts Nvidia among its customers, dragging on the overall Nikkei.

Movements in foreign exchange also weighed on sentiment after the yen hit a three-week high of 143.45 against the dollar on Monday.

(Reporting by Brigid Riley; Editing by Rashmi Aich)

Tiptoeing nervously along US rate path

World markets are entering a period of nervous uncertainty as investors try to determine whether upcoming US interest rate cuts will be benign and in tandem with a “soft landing,” or mitigation against a more damaging economic downturn.

Asian markets leaned towards the former on Monday and traded positively. But risk appetite steadily whittled away as the day progressed, pushing Wall Street into the red and setting the tone for a more jittery session on Tuesday.

The Asia and Pacific calendar on Tuesday is light, with Japanese producer prices and trade figures from Hong Kong and Thailand the major economic indicators on tap. Australian mining giant BHP’s annual results are the main corporate highlight.

Global market dynamics will therefore be the more important drivers for Asia as investors continue to digest the implications of Fed Chair Jerome Powell’s policy pivot at Jackson Hole on Friday.

Fears of a US recession and a continued rise in unemployment are keeping a 50 basis point rate cut from the Fed next month on the table. This is putting US stocks on the defensive and fueling demand for Treasuries, although bonds and the dollar were generally flat on Monday.

World stocks ended slightly lower on Monday, but not before hitting a new record high. Nvidia shares slid ahead of the AI darling’s quarterly results on Wednesday, pushing Wall Street lower but not before registering a fresh six-week high.

Gold hugged recent record peaks, while oil prices rose again on Monday as production cuts in Libya added to supply concerns stemming from reports of escalating conflict in the Middle East. Oil is now up 8% in three days.

So it is a mixed bag for Asia on Tuesday. This is the backdrop to a re-emergence of trade tensions between China and the West, as the Biden administration prepares to announce final implementation plans for steep tariff increases on certain Chinese imports.

US manufacturers have asked for the higher tariff rates on a range of goods from electric vehicles to electric utility equipment to be reduced, delayed or abandoned, and for potential exclusions to be greatly expanded.

The White House had said initially the new tariffs would take effect on Aug. 1 but that was delayed. The politically loaded decision on what form they will take will be made by the end of the week.

Canada’s Prime Minister Justin Trudeau on Monday said that Canada will impose a 100% tariff on the import of Chinese electric vehicles, including Teslas, and will also impose a 25% tariff on imported steel and aluminum from China.

Here are key developments that could provide more direction to Asian markets on Monday:

– Japan services PPI (July)

– Thailand and Hong Kong trade (July)

– Australia BHP annual results

(Reporting by Jamie McGeever)

S&P 500 ends lower, weighed down by Nvidia dip

The S&P 500 finished lower on Monday, with AI heavyweight Nvidia dipping ahead of its quarterly report this week, while investors awaited inflation data for clues about the path of interest-rate cuts by the Federal Reserve.

The tech-heavy Nasdaq also declined, but the Dow Jones Industrial Average was supported by gains of about 1% each in Caterpillar and American Express and finished just slightly up.

Nvidia dropped 2.25% ahead of its report on Wednesday in what is set to be the US stock market’s most closely watched event of the week.

Some investors worried that anything short of a stellar forecast from Nvidia could shatter Wall Street’s rally in AI-related companies, including Microsoft, Alphabet, and Meta Platforms.

“Nvidia could disappoint. I think when you get to the point where the majority doesn’t even suspect that there could be a piece of bad news, that’s typically where you get it,” warned Jake Dollarhide, chief executive of Longbow Asset Management in Tulsa, Oklahoma.

US-listed shares of PDD Holdings tumbled almost 29% after the Temu-owner missed market expectations for second-quarter revenue.

Tesla lost 3.2% after Canada, following the lead of the US and European Union, said it would impose a 100% tariff on imports of Chinese electric vehicles.

The S&P 500 declined 0.32% to end the session at 5,616.84 points.

The Nasdaq declined 0.85% to 17,725.77 points, while Dow Jones Industrial Average rose 0.16% to 41,240.52 points.

Of the 11 S&P 500 sector indexes, six declined, led lower by information technology, down 1.12%, followed by a 0.81% loss in consumer discretionary.

The energy sector index jumped 1.11% following reports of oil supply disruptions amid the geopolitical conflict in the Middle East lifted crude prices.

Boeing slipped 0.85% after NASA picked SpaceX over the planemaker’s Starliner to return its astronauts from space next year.

Wall Street rallied on Friday, with the S&P 500 nearing record highs after Fed Chair Jerome Powell said “the time has come” to lower borrowing costs in the light of a diminishing upside risk to inflation and moderating labor demand.

Money markets suggest traders see a 70% chance of a 25 basis point interest rate cut and a 30% chance of a 50 basis point cut in September, according to the CME Group’s FedWatch tool.

Friday’s highly anticipated Personal Consumption Expenditure data for July, the central bank’s preferred inflation gauge, could provide more insight into the policy easing trajectory.

Results from Dell, Salesforce, Dollar General, and Gap are on tap this week.

Advancing issues outnumbered falling ones within the S&P 500 by a 1.1-to-one ratio.

Across the US stock market, declining stocks outnumbered rising ones by a 1.2-to-one ratio.

Volume on US exchanges was relatively light, with 9.5 billion shares traded, compared to an average of 11.9 billion shares over the previous 20 sessions.

(Reporting by Johann M Cherian and Purvi Agarwal in Bengaluru; Editing by Pooja Desai and David Gregorio)

Safe-haven yen, US dollar rally on escalating Middle East tension

NEW YORK – The US dollar rallied from an eight-month low on Monday, while the yen rose against most currencies, as geopolitical tension in the Middle East intensified, prompting investors to seek safe-haven shelter.

Volume was lighter than usual, with UK markets closed for a public holiday.

The Swiss franc also advanced after Israel and Hezbollah fired missiles at each other over the weekend in one of the biggest clashes in more than 10 months of border conflict.

“Geopolitical tension, absolutely, is a factor. Israel and Lebanon moved the market for sure,” said Amo Sahota, executive director at Klarity FX in San Francisco. “Oil prices rallied pretty significantly about 3%. They were down last Friday, so that recovery has benefited some currencies such as the yen, Swiss franc, and the Canadian dollar.”

In afternoon trading, the US dollar index, a gauge of the dollar’s value against six major currencies, advanced 0.2% to 100.84, rising from its lowest since late December of 100.53.

Against the yen, the dollar was flat to slightly higher at 144.51. It earlier dropped to a three-week low of 143.45.

The euro fell versus the Japanese currency, down 0.1% at 161.45 yen, while the Swiss franc tumbled 0.7% to 169.97 yen.

Helen Given, FX trader at Monex USA in Washington, said overall the yen had gained more than the other safe havens, particularly against the dollar, as it continued to benefit from an expected US interest rate cut next month, which was confirmed by Federal Reserve Chair Jerome Powell last Friday in a hawkish speech in Jackson Hole, Wyoming.

That prompted traders to seal bets of a 25 basis point (bps) rate cut in September and even boost expectations of a super-sized 50 bps rate cut.

“Powell comes in and sounds really quite alarmist, in a way, particularly his comments around employment reports,” said Klarity’s Sahota.

“His comments had nothing about slow, gradual rate cuts. He seemed to be giving an open letter to say that if data suggests, we will go hard and we will go fast.”

The dollar recovered a bit against the yen after data showed US durable goods orders surged 9.9% in July, after falling in June. However, non-defense capital goods orders excluding aircraft, a closely-watched proxy for business spending plans, dipped 0.1% after a downwardly revised 0.5% increase in June.

The euro eased 0.3% against the dollar to USD 1.1161. Sources told Reuters that ECB policymakers are lining up behind another rate cut on Sept. 12.

The risk-off sentiment also weighed on the Australian and New Zealand dollars and the Norwegian crown, which were all lower against the dollar.

At the same time, the risk-off stance benefited the Swiss franc. The dollar slipped 0.1% against the Swiss franc to 0.8469 francs. The euro also fell 0.3% against the Swiss currency to 0.9454.

Sterling, meanwhile, slid 0.2% against the dollar to USD 1.3192 after jumping as far as USD 1.3229 on Friday for the first time in 17 months. Bank of England head Andrew Bailey said on Friday it was “too early to declare victory” over inflation, signaling a less aggressive stance on interest rate cuts than the Fed.

(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Kevin Buckland in Tokyo and Sruthi Shankar in Bengaluru; Editing by David Evans, Kirsten Donovan, and Rosalba O’Brien)

Bank of Korea eyed, US yields slide

The Bank of Korea’s interest rate decision and guidance take center stage in Asia on Thursday, as investors digest revised US jobs data and Fed minutes on Wednesday that fanned hopes that the looming US rate-cutting cycle will be a bold one.

The calendar in Asia also includes purchasing managers index data from Japan, Australia, and India, inflation from Malaysia, and some company earnings from China and Hong Kong, namely Baidu’s second-quarter results.

China’s largest search engine provider is expected to see a decline in revenue for the first time since the fourth quarter of 2022 as ad sales drop. Investors will look for comments on ad market trends and updates on its key AI offering Ernie Bot.

The broader trading and investment picture, however, will be dominated by the latest shift in the US rate outlook, as attention turns toward Fed Chair Jerome Powell’s Jackson Hole speech on Friday.

Lower Treasury yields and a falling dollar should help ease financial conditions for emerging markets and encourage risk-taking in Asia on Thursday, providing the slump in yields isn’t reflecting heightened fears of recession.

That doesn’t appear to be the case – Wall Street rose on Wednesday and the S&P 500 is now less than 1% from its all-time peak – although the fall in Treasury yields will bear close attention.

The dollar hit another low for the year against a basket of G10 currencies on Wednesday and the MSCI index of emerging market currencies hugged its record high. China’s yuan was fixed at a one-month high on Wednesday, while the Japanese yen touched a two-week high through 145.00 per dollar.

The dollar is suffering across the board from falling US yields.

After the Bank of Thailand, Bank Indonesia and People’s Bank of China all kept their benchmark lending rates unchanged this week, the spotlight falls on the Bank of Korea on Thursday.

On Wednesday the Thai central bank struck a neutral tone in its statement, while Bank Indonesia Governor Perry Warjiyo said supporting the rupiah helps bring down the cost of imports, especially food prices.

The BOK is also expected to stand pat on rates and leave its benchmark rate at 3.50% where it has been since January last year. Analysts expect the BOK to wait for the Fed to begin cutting rates before easing policy in the fourth quarter.

With inflation rising 2.6% in July from an 11-month low of 2.4% in June, moving further away from the central bank’s 2% target, the BOK may need to see prices stabilizing before it starts to ease policy.

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

– South Korea interest rate decision

– Japan, Australia, India manufacturing & services PMIs (August)

– Malaysia inflation (July)

(Reporting by Jamie McGeever; Editing by Josie Kao)

Dollar drops as jobs gains revised sharply lower

The dollar fell to a more than one-year low against the euro and sterling on Wednesday after data showed employers added 818,000 fewer jobs in the year to March 2024 than previously thought.

The data was released later than its scheduled 1000 EDT time, leading to market confusion and some choppy trading.

“It suggests the labor market was not as strong as the Fed believed at the time and has been communicating. But it’s less clear what it means for the outlook going forward,” said Vassili Serebriakov, an FX strategist at UBS in New York.

“This is very consistent with the Fed starting to cut rates. But it’s harder to say what it means for the pace of easing and other details,” he added.

Traders will focus on comments by Fed Chair Jerome Powell on Friday at the Kansas City Fed’s Jackson Hole economic symposium for any new clues on his view of the labor market and whether he references Wednesday’s data.

Markets in particular are looking for clarity on the likely size of a rate cut next month, and whether borrowing costs are likely to be lowered at each subsequent Fed meeting.

Traders are pricing in a 33% probability of a 50 basis point cut, little changed from before the jobs data, and a 67% chance of a 25 basis point reduction, according to the CME Group’s FedWatch Tool.

“It got easier for the Fed to cut rates now and through year-end but I don’t think it makes a strong case for 50 basis points,” said Adam Button, chief currency analyst at ForexLive in Toronto.

“We know that it was a year of solid economic growth, that company profits were fine, and that the economy grew at a good clip for the year ending in March,” Button said.

Fewer-than-expected job gains in July and an unexpected increase in the unemployment rate led traders to price for larger rate cuts on concern the United States is facing an imminent recession.

Those concerns were rowed back by better data, including a strong retail sales report for July and also higher-than-expected shelter inflation for the month.

But markets remain highly sensitive to jobs data for any new signs that the economy is worsening at a quicker pace.

The Fed is due to release the minutes from its July 30-31 meeting on Wednesday.

August employment and inflation data will be released after Powell’s speech but before the September meeting.

The dollar index was last down 0.16% at 101.22, the lowest since Dec. 29. The euro rose 0.11% to USD 1.1142, the highest since July 2023.

Strength in the euro may be stretched after the recent rally, said UBS’ Serebriakov.

“You haven’t seen a big move in US rates. I don’t think the European data is especially positive for the euro. So, it seems still a bit of a technical move in FX,” he said.

Sterling strengthened 0.36% to USD 1.3076, also the highest since July 2023.

The dollar weakened 0.05% to 145.18 Japanese yen, the lowest since August 7.

Bank of Japan Governor Kazuo Ueda is expected to discuss the central bank’s decision last month to raise interest rates when he appears in parliament on Friday.

The Bank of Japan will raise interest rates again by year-end, according to more than half the economists in a Reuters poll published on Wednesday, with those who had a view on which month leaning towards a December increase.

Data next week is expected to show Japan’s consumer inflation rate picked up in July for a third consecutive month, a Reuters poll of 18 economists showed.

In cryptocurrencies, bitcoin rose 0.31% to USD 59,498.

(Reporting By Karen Brettell; Editing by Sharon Singleton and Nick Zieminski)

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