Wednesday, January 26

Gold rises higher – Moneyweb


Gold surged as fears of a spill-over from Asian property developer China Evergrande Group’s debt troubles fueled demand for havens, outpacing concerns that reduced stimulus from the Federal Reserve could come soon.

US stocks fell more than 2% as investor distress deepened over China’s real estate sector and the Fed’s downsizing. The dollar rose to the highest level in nearly a month, while bond yields The Treasury fell, boosting demand for non-interest bearing bullion.

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“Gold actually acts like gold. It is receiving flight purchases to safety due to concerns about how bad we are getting with the news over the weekend outside of China, ”said Bob Haberkorn, senior market strategist at RJO Futures. “If there is a full sequel, it will affect the markets.”

Evergrande will have interest payments on its two notes due Thursday, a key test in determining whether the Chinese real estate giant will continue to meet its obligations to bondholders even as it falls behind on payments to banks, suppliers and holders of bond products. investment in land. Investors will also look for clues about how willing the Xi Jinping government is to step in and help the world’s most indebted real estate developer prevent financial contagion from destabilizing the world’s second-largest economy.

Meanwhile, Federal Reserve Chairman Jerome Powell faces a challenge at the central bank meeting that begins Tuesday as he leans toward reducing stimulus, while trying to avoid speculation that such a shift heralds rate hikes. of interest. Fed officials are expected to signal a start in reducing bond purchases, and economists surveyed by Bloomberg see that clue followed by a formal announcement in November.

The traditional safe haven has lost 8% this year as central banks chart a course to reduce the unprecedented monetary stimulus that was implemented to rescue economies from the impact of the pandemic.

There is increased uncertainty in the markets about the outlook for President Joe Biden’s $ 4 trillion economic agenda, as well as the need to raise or suspend the US debt ceiling. Treasury Secretary Janet Yellen said that the US government will run out of money to pay its bills sometime in October without taking action on the debt ceiling, warning of an “economic catastrophe” unless lawmakers take the necessary action.

Spot gold was up 0.4% at $ 1,761.83 an ounce as of 2:21 pm in New York, after sinking earlier to the lowest intraday level since Aug. 12. Bullion futures for December delivery rose 0.7% to settle at $ 1,763.80 on the Comex. The Bloomberg Dollar Spot Index was up 0.2%. Silver and platinum fell.

Palladium fell to its lowest level since June amid continuing concerns that a global chip shortage at automakers is slowing demand growth for car catalytic converters, which are the metal’s biggest users. reduces emissions.

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