CENTRAL BANK MEETINGS

Investor focus was shifting to the two major central bank meetings later this week. The U.S. Federal Reserve holds a policy meeting on Wednesday, where it is widely expected to deliver its second interest rate hike for the year.

U.S. inflation data due later in the day will also add to speculation over the path for U.S. interest rates later this year. Markets are currently pricing a slightly more than 1 in 5 chance of a fourth interest rate hike by the end of the year.

On Thursday, the European Central Bank meets and some expect the Bank to provide guidance for an ending of its massive bond-buying program at the end of this year.

Due at 0900 GMT is the ZEW index of economic sentiment, which may provide markets a glimpse of whether recent economic data misses in Europe have dented sentiment in corporate Germany.
In currencies, the dollar was 0.1 percent lower against a basket of peers. .DXY

On the safe haven yen, the dollar jumped to a three-week top JPY= of 110.49 in early deals. It was last at 110.25.

Helping calm markets were comments from Italy’s new coalition government that it had no intention of leaving the euro zone and planned to cut debt.

The euro EUR= was just below a three-week high of $1.1840, up 0.1 percent on the day.

In commodities, U.S. crude CLc1 was rose half a percent to $66.39 per barrel, while Brent LCOc1 climbed half a percent to $76.86. Spot gold XAU= slipped 0.2 percent to $1,296.95 an ounce.

U.S. ECONOMY POWERS AHEAD

Signs of strength in the U.S. economy helped keep bears at bay. 

Data released on Friday showed U.S. job growth accelerated in May and the unemployment rate dropped to an 18-year low of 3.8 percent, indicating a rapidly tightening labour market.

The strong report added to a string of upbeat economic data, including consumer spending, industrial production and construction spending, making the Federal Reserve all but certain to raise interest rates at its policy meeting next week.

U.S. Treasury yields edged higher, with 10-year paper at 2.9076 percent, while the dollar eased 0.4 percent against its currency basket to 93.802.

U.S. crude futures traded lower at $65.40, back at their lowest levels in nearly two months. Rising U.S. crude production and a glut due to a lack of pipeline capacity have pressured prices.

Global benchmark Brent was down 1.3 percent at $75.76.

US Stocks - Future dip as Trump's comments spark trade talk uncertainty

Global Stock Markets

U.S. stock index futures were lower on Wednesday on fresh uncertainty over U.S.-China trade talks and ahead of a Federal Reserve report that would be watched for cues on pace of future interest rate hikes.

 

Futures down: Dow 0.73 pct, S&P 0.61 pct, Nasdaq 0.93 pct

Earlier optimism of trade talks progressing reversed on Tuesday after U.S. President Donald Trump said he was not pleased with recent trade talks between the United States and China and also raised doubts about the upcoming North Korea summit.

The comments tempered expectations that the United States and China would be able to avert a damaging global trade war.

The Federal Reserve's May meeting minutes, scheduled for release at 2:00 p.m. ET, will be scrutinized for indications of how many rate hikes are likely this year.

The U.S. central bank lifted borrowing costs in March and policymakers are split between those who expect another two rate hikes this year and those who forecast three, in the backdrop of low unemployment, moderate growth and rising inflation.

At 7:28 a.m. ET, Dow e-minis were down 182 points, or 0.73 percent. S&P 500 e-minis were down 16.5 points, or 0.61 percent and Nasdaq 100 e-minis were down 64.5 points, or 0.93 percent.

U.S. 10-year Treasury yields fell to eight-day lows as investors shunned risk. Twenty-eight of the 30

Dow Jones Industrial Average components were trading premarket and all indicated a lower open.
Target sank 5.6 percent after the retailer's quarterly profit rose less than expected as increasing investments dented margins.

Tiffany jumped 11.7 percent after the jeweler's quarterly results blew past estimates and the company also raised its full-year profit forecast and announced a $1 billion share buyback program.

On the economic front, new home sales numbers for April are expected to fall to 679,000 units, from 694,000 units the month before.

Gold edges up as dollar loses momentum

Global Stock Markets

Gold edged up on Tuesday from a 2018 low, adding traction as the dollar fell off its five-month
high, though risk appetite in the broader financial markets kept the precious metal's gains in check. 

The dollar lost momentum following a broad rally prompted by rising U.S. bond yields and the prospect of a resolution to U.S.-China trade tensions.

A weaker dollar makes dollar-priced gold cheaper for non-U.S. investors.

Washington and Beijing both claimed victory on Monday as the world's two largest economies stepped back from the brink of a global trade war and agreed to hold further talks to boost U.S. exports to China. 

Spot gold had edged up 0.2 percent to $1,294.81 per ounce by 1011 GMT. In the previous session, it slid to $1,281.76, its lowest since Dec. 27.  

U.S. gold futures for June delivery rose 0.3 percent to $1,294.30 per ounce.

Capping gains in gold, European shares inched to a near four-month high as an easing of pressure on Italian markets coincided with China's latest move to open its giant economy to the rest of the world.

Gold, seen as a safe haven, tends to weaken when there is strong investor appetite for equities, seen as risky assets. 

Meanwhile, expectations that the Federal Reserve will lift U.S. interest rates again next month added to downward pressure on gold. Higher U.S. rates tend to boost the dollar and push bond yields up, making non-yielding assets such as bullion less attractive. 

Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.38 percent to 852.04 tonnes on Monday. 

Silver rose 0.7 percent to $16.60 an ounce, while palladium fell 1.4 percent to $975.72 an ounce.
Platinum climbed 1.2 percent to $907.10 an ounce, after marking a low for the year in the previous session at $873.50.

World markets themes for the week ahead

The Federal Reserve has acknowledged U.S. inflation has perked up, adding to the conviction that interest rates will rise faster this year than previously anticipated. Price data due next week might cement investors’ view.

While leaving the benchmark Fed funds rate unchanged at its last meeting, the central bank included somewhat more hawkish language in its statement, noting that “on a 12-month basis, both overall inflation and inflation for items other than food and energy have moved close to 2 percent”.

Latest data showed the U.S. economy added 164,000 jobs, less than forecast, while wages barely rose. However, the Fed’s preferred inflation measure, the so-called core PCE, rose 1.9 percent in the 12 months through March, the biggest increase since February 2017.

Producer price and consumer price indexes are due next Wednesday and Thursday, respectively, and investors fear that stock and bond markets won’t get much reprieve from the rate-hike concerns of recent weeks.

The Fed is currently signalling two more rate rises this year, but the inflation figures, if strong enough, could just confirm expectations that it will squeeze in a third.

Japanese yen raced to highest level in more than 16 months

Asian Stock Markets

The Japanese yen raced to its highest level in more than 16 months and the Swiss franc surged on Friday as the growing threat of a trade war prompted investors to take shelter in perceived low-yielding currencies. 

With short positions in the yen at near record highs, according to weekly positioning data, thanks to years of using the Japanese yen as a funding currency to buy high yielders, markets braced for some unwinding of those bets. 

The dollar fell to as low as 104.635 yen on Friday, the greenback's lowest level since November 2016. The dollar was last down 0.5 percent at 104.80 yen JPY=EBS. 

The broad rise in the yen came as financial markets were rattled by worries over rising U.S.-China trade tensions. 

U.S. President Donald Trump signed a presidential memorandum on Thursday that will target up to $60 billion of Chinese products with tariffs, but only after a 30-day consultation period that starts once a list of goods is published. 

The broad rise in the yen came as financial markets were rattled by worries over rising U.S.-China trade tensions. 

A gauge of stress in the U.S. money markets climbed to its highest level in nearly nine years on Tuesday on concerns about growing costs for banks and other companies to borrow dollars and further interest rate increases from the Federal Reserve. 

The gap between the three-month dollar London interbank offered rate USD3MFSR= and three-month overnight indexed swap rate USD3MOIS= expanded to 58 basis points, the widest since May 2009, according to Thomson Reuters data. 

In a week that the U.S. Federal Reserve broadly stuck to its “dot plot” on future interest rate moves and signaled a relatively upbeat outlook for the economy, 10-year U.S. Treasury yields are on track to post its second biggest drop so far this year, further weighing on the greenback. 

Against a basket of its rivals, the dollar .DXY was on track to fall 0.2 percent, taking its weekly losses to about 0.6 percent, its biggest drop in a month. 

The Swiss franc CHF= was also the other notable winner in currency markets this week with a 0.6 percent rise. 

In other currencies, sterling GBP=D3 was relatively stable in the backdrop of an EU summit with the British currency changing hands at $1.4107.

U.S. stock index futures treaded Water - Fed meeting, Trump's tariffs in focus

Global Stock Markets

U.S. stock index futures treaded water Tuesday, a day after a Facebook-led selloff sent Wall Street swooning, with investors bracing for an imminent interest rate hike and as the United States readies to slap tariffs on China.

The Federal Reserve is widely expected to increase rates by a quarter basis point at the end of its two-day meeting on Wednesday, but the markets are more focused on how aggressive the central bank will be with monetary policy. 

Traders currently expect two more rate hikes later this year, although they said policymakers could set a hawkish tone by forecasting four increases in their “dot plot” projections. 

The Trump administration is expected to unveil up to $60 billion in new tariffs on Chinese imports by Friday, targeting technology, telecommunications and intellectual property

Traders said Monday’s sell-off could be an excuse for investors to readjust positions as they brace for a new monetary policy regime under Fed Chair Jerome Powell as well as additional protectionist trade measures by Trump. 

By 6:57 a.m. ET, Nasdaq 100 e-minis NQc1 were down 6.25 points, Dow e-minis 1YMc1 fell 11 points, while S&P 500 e-minis ESc1 rose 2.25 points. 

The Nasdaq Composite index .IXIC and the S&P 500 technology index .SPLRCT both fell more than 2 percent on Monday, in their steepest one-day declines since Feb. 8. 

Shares of Facebook (FB.O), which instigated the rout, were down 0.15 percent in premarket trading following a 6.8 percent drop on Monday on reports that its users’ data was misused. 

Chief Executive Mark Zuckerberg faced calls from both U.S. and European lawmakers demanding explanations and the fears of greater regulation, or at least scrutiny, on how companies use data had sent shares of other internet stocks down as well. 

Apple (AAPL.O), Alphabet (GOOGL.O), Netflix (NFLX.O), Microsoft (MSFT.O) and Amazon (AMZN.O) were up between 0.3 percent and 0.7 percent. 

Software stocks could come under pressure Tuesday after Oracle (ORCL.N) reported quarterly revenue that missed Wall Street estimates on disappointing sales from its cloud business. The stock was down 8.9 percent premarket.

Stocks Slide With Commodities; Treasuries Retreat

European Stock Markets

Stocks declined globally on Monday as investors braced for a week packed with risk events, from central bank decisions to Brexit talks to a G-20 gathering. Commodities were weaker across the board, the dollar reversed an advance and Treasury yields rose. 

The Stoxx Europe 600 Index headed for the first decline in three days as technology companies slumped with miners, with almost every industry group in the red.

The MSCI Asia Pacific Index of stocks also fell, with tech shares also under pressure as Apple appeared poised to disrupt its supply chain. The yen fluctuated amid a drop in support for Japanese Prime Minister Shinzo Abe’s cabinet, which has championed currency weakness. Core European government bonds followed Treasuries lower. Gold dropped.

The biggest focus for global markets this week will be the first U.S. interest rate decision under the Federal Reserve’s new Chairman Jerome Powell.

It comes just weeks after he hinted to investors that he’s open to lifting the policy rate four times this year, rather than the three currently reflected in dot-plot forecasts. Some Wall Street banks such as Goldman Sachs Group Inc. expect the median projection to rise to four on Wednesday, while others say there will be no change following a round of mediocre data and policy makers’ stated intentions to move gradually.

Trade tensions also remain in the spotlight as U.S. Treasury official David Malpass said he misspoke hours after claiming the U.S. was pulling out of decade-old formal economic talks with Beijing. Meanwhile, investors are assessing the implications of a new head at China’s central bank.

Elsewhere, the ruble weakened for a sixth day, the longest losing streak since October, as Russian President Vladimir Putin won a landslide victory in a tightly controlled election. Bitcoin recovered to trade back above $8,000 after tumbling as much as 13 percent from Friday. West Texas oil fell toward $62 a barrel.

Stocks
The Stoxx Europe 600 Index declined 0.6 percent as of 10:39 a.m. London time.
Futures on the S&P 500 Index decreased 0.5 percent to the lowest in more than a week.
The MSCI Asia Pacific Index dipped 0.6 percent.
The U.K.’s FTSE 100 Index sank 1.3 percent on the biggest tumble in more than two weeks.
The MSCI Emerging Market Index decreased 0.5 percent on the largest dip in two weeks.

Currencies
The euro advanced less than 0.05 percent to $1.2296.
The British pound climbed 0.6 percent to $1.4032, the strongest in more than a month on the biggest increase in more than a month.
The Japanese yen dipped 0.1 percent to 106.09 per dollar.
South Africa’s rand sank 0.4 percent to 12.0231 per dollar, the weakest in more than five weeks.
The MSCI Emerging Markets Currency Index declined 0.1 percent to the lowest in two weeks.

Bonds
The yield on 10-year Treasuries gained two basis points to 2.86 percent.
Germany’s 10-year yield rose one basis point to 0.58 percent.
Britain’s 10-year yield climbed three basis points to 1.429 percent, the biggest surge in almost three weeks.

Markets wave off global risks; Simmering fears of a global trade war.

Global Stock Markets

An embarrassing political scandal in Japan. Rapid job-turnover inside the White House and the threat of faster interest rate hikes in the United States. 

In any other era, this concoction would be a perfect recipe for heightened market volatility. But in recent months, markets have brushed aside risks and recurring bad news on geopolitics to stay focussed on positive macro-economic cues. 

And Guy Debelle, the Australian central banker who oversaw a review of global foreign exchange standards, says it doesn’t make sense. 

Investors got a taste of what the spike in volatility might look like when in early February fears of faster U.S. rate hikes hammered world shares.

That sell-off was short-lived, though, and equity prices are now not too far from their February highs.

A gauge of market volatility .VIX is near all-time lows, while most estimates of the term premium for 10-year Treasuries US10YT=RR are around zero, or even negative, despite projections of multiple rate rises by the U.S. Federal Reserve this year and next.

This comes at a time the world is seeing the first synchronised global growth since 2007, with strong corporate earnings and blistering job-creation.

Higher rates could all but dampen the optimism, and that is just one of the many risks.

The danger of a global trade war looms after U.S. President Donald Trump slapped duties on imported steel and aluminium and has threatened further tariffs on Chinese goods. 

In Japan, a cronyism scandal has engulfed Prime Minister Shinzo Abe and Finance Minister Taro Aso, causing uncertainty around political stability. 

Yet the market response so far: stay calm and look away. 

Despite shock events like Britain’s vote to leave Europe, the threat of a euro-zone break up and the potential for a nuclear war with North Korea, market volatility spiked only temporarily. 

In fact, equity returns last year were among the highest since the 2008 global financial crisis. 

Emerging markets did well too, and the Australian dollar AUD=D4, considered a barometer for global risk, jumped 8.7 percent in 2017, its best performance in seven years. 

For Shane Oliver, Sydney-based head of investment strategy at AMP Capital, risks can create chances to buy.

Gold slips as dollar firms ahead of CPI report that could shift Fed rate-hike pace

Global Stock Markets

Gold prices retreated Tuesday as the dollar firmed ahead of a reading on U.S. consumer-level inflation that could push the Federal Reserve into more-aggressive interest-rate moves this year.

April gold GCJ8, -0.08% slipped $1.90, or 0.1%, to $1,318.90 an ounce.

The ICE U.S. Dollar Index DXY, +0.08%  was up 0.2% at 90.062, and if that action continues, the dollar could notch its first gain in thee sessions. Dollar-yen USDJPY, +0.73%  traded at a two-week high.

Consumer prices are due at 8:30 a.m. Eastern, with economists polled by MarketWatch forecasting a 0.2% gain for February, with a prediction for milder inflation owing to lower gasoline prices. Core prices, which strip out gas and food, are expected to rise by the same amount.

On an annual basis, headline consumer prices likely held steady at 2.1% in January, and core prices were unchanged at 1.8%.

A stronger-than-expected inflation number could nudge the central bank closer to four hikes instead of the three that the Federal Reserve has tentatively worked into its plans. The Fed is expected to increase interest rates in March, but the jury out on how aggressively it will act beyond that. For this reason, investors have become hypersensitive to inflation data.

Rising inflation could add pressure on the Fed to speed up its rate rises, which could lift the dollar, though strangle the stock market. Gold, in turn, although negatively affected by higher interest rates, could attract hedging demand against too-hot inflation.

As for other metals, May silver SIK8, +0.02%  fell 1 cent, or 0.1%, to $16.525 an ounce.

Net long positions in U.S. silver futures increased for the first time since January, UBS analyst Joni Teves said in a note.

Among exchange-traded funds, the silver-focused exchange-traded iShares Silver Trust SLV, -0.13%  and the SPDR Gold Shares GLD, +0.00% registered limited action in early trading. The VanEck Vectors Gold Miners ETF GDX, +0.28% however, added 0.6%.

May copper HGK8, +0.06%  was little changed at $3.125 a pound. April platinum PLJ8, +0.14% rose 0.1% to $964.00 an ounce and June palladium PAM8, +0.97%  rose 0.8% to $975.20 an ounce.

Stocks Struggle as Bond Yields Fall; Dollar Gains

European Stock Markets

Stocks in Europe struggled for direction after a positive session in Asia as investors debate the outlook for central bank policy normalization. Bonds across the euro region gained with Treasuries, while the dollar recovered some of Thursday’s drop.

The Stoxx Europe 600 Index was little changed as car maker declines offset gains in telecom shares.

The MSCI Asia Pacific Index rose, underpinned by gains in Tokyo, Hong Kong, Sydney and Seoul equity markets. The dollar strengthened against most major currencies and ten-year U.S. yields ticked lower, though still near their highest since 2014. Bond yields dropped across the euro region and the common currency slipped after minutes from the European Central Bank showed officials continue to lay the groundwork for a shift in policy language.

Interest-rate-hike jitters returned to markets after minutes of the Federal Reserve’s January meeting indicated the U.S. central bank is confident the economy is strengthening. Subsequent data confirmed that view, but also brought signs of rising inflation, cutting against the long-held view that it will remain short of policy makers’ targets.

Elsewhere, Bitcoin fell below $10,000. The pound inched lower, and is headed for a third weekly decline since January, as U.K. Prime Minister Theresa May locks down her ministers in a bid to agree on what kind of post-Brexit trade deal they want from the EU. Terminal users can read more in our markets blog. Here are some key events scheduled for the remainder of the week:

The Federal Reserve officials John Williams speaks in Los Angeles on the outlook for the U.S. economy, while Bill Dudley and Eric Rosengren are participating in a panel discussion in Chicago.

The Fed is publishing its semi-annual monetary policy report to Congress, before Chairman Jerome Powell’s testimony before House and Senate committees next week

ECB board member Benoit Coeure participates in a panel discussion with the Fed’s Loretta Mester in New York

Euro-region consumer prices data may show inflation ticking lower to 1.3 percent in January from 1.4 percent, according to the median estimate in a Bloomberg survey

Stocks

• The Stoxx Europe 600 Index increased less than 0.05 percent as of 8:10 a.m. London time.
• The U.K.’s FTSE 100 Index fell 0.1 percent to the lowest in more than a week.
• Germany’s DAX Index gained 0.1 percent.
• Futures on the S&P 500 Index climbed 0.4 percent to the highest in a week.
• The MSCI Asia Pacific Index advanced 0.9 percent.
• Japan’s Topix index rose 0.8 percent, Hong Kong’s Hang Seng Index climbed 1 percent, and South Korea’s Kospi was up 1.5 percent.
• Australia’s S&P/ASX 200 Index gained 0.8 percent.

Currencies

• The Bloomberg Dollar Spot Index advanced 0.1 percent.
• The euro decreased 0.3 percent to $1.2292.
• The British pound dipped 0.1 percent to $1.3943.
• The Japanese yen declined 0.1 percent to 106.90 per dollar.

Bonds

• The yield on 10-year Treasuries declined one basis point to 2.91 percent.
• Germany’s 10-year yield fell two basis points to 0.70 percent, the lowest in four weeks on the largest fall in a week.
• Britain’s 10-year yield decreased three basis points to 1.546 percent, the lowest in more than three weeks.
• Japan’s 10-year yield dipped less than one basis point to 0.053 percent, the lowest in more than seven weeks.

Commodities

• West Texas Intermediate crude declined 0.1 percent to $62.68 a barrel.
• Gold declined 0.4 percent to $1,327.29 an ounce.

Fed points upwards for rates, world stocks lurch downward

Global Stock Markets

World stocks tumbled to one-week lows on Thursday after the U.S. Fed confirmed it was on track to raise interest rates several times this year, sending bond yields to new multi-year highs. 

 

While U.S. 10-year yields retreated after nearing the psychologically key 3 percent level, the minutes of the U.S. Federal Reserve’s meeting at the end of January has at least temporarily taken the edge off investors’ appetite for equities and other assets perceived as risky, such as emerging markets and commodities.

The dollar too was trading just off 10-day highs against a basket of currencies .DXY and was set for its first week of gains this year.

Three rate rises are now almost fully priced in for 2018, compared with two as recently as December, and some traders are even contemplating the possibility of four rate rises in 2018.

Despite all the solid earnings reports, Wall Street saw steep losses on Wednesday after the Fed minutes, and Asian and European markets lost ground too, falling around 1 percent .MIAPJ0000PUS .N225 .

The latter failed to even benefit from robust earnings updates from a series of firms ranging from 

British bank Barclays (BARC.L) to French utility Veolia (VIE.PA). 

MSCI’s all-country equity index .MIWD00000PUS fell 0.4 percent for its third straight day of losses while emerging equities lost 1 percent .MSCIEF.

New York was set for another weak session, futures suggested, with S&P futures down around 0.3 percent ESc1. 

Analysts noted that the January Fed meeting had happened after lawmakers approved a $1.5 trillion package of tax cuts, potentially adding more fuel to an economy which has already picked up steam. 

The 3 percent level on 10-year U.S. yields is seen as a huge psychological milestone for bulls and bears alike. 

In the meantime though the yield, which hit four-year highs around 2.96 percent after the minutes, retreated to 2.92 percent US10YT=RR. Two-year yields touched new nine-year peaks. 

That weighed on euro zone yields, with the German 10-year benchmark DE10YT=RR down one basis point. Yields were also dampened by data showing German business confidence fell more than expected in February, though Europe’s biggest economy is clearly set for solid growth. 

The next hurdle for markets will be minutes from the European Central Bank’s last meeting at 1230 GMT, with investors keen to see if there was more talk of an eventual unwinding of stimulus. 

The “transatlantic spread” between German and U.S. 10-year borrowing costs widened to near a year high at 220 bps, reflecting the diverging monetary policy expectations between the two countries.

Britain however confirmed itself as one of the weak spots in the world economy, with data showing below-forecast 0.4 percent growth in the last quarter of 2017. That pushed sterling 0.2 percent lower against the dollar GBP=, a one-week low. 

The firmer dollar pummeled commodities too - Brent crude futures were down 0.4 percent COc1 while gold and copper prices also fell CMCU3 XAU=.

Gold steady ahead of Fed minutes

Global Stock Markets

Gold steadied on Wednesday after its biggest one-day slide in two-and-a-half months as investors awaited the minutes of the Federal Reserve’s latest policy meeting later for clues on the outlook for US interest rates.

Fresh gains in the dollar, however, kept prices under pressure, holding the metal near a one-week low.
Spot gold was at $1,328.80/oz at 10.30am GMT, little changed from late on Tuesday but off an earlier low of $1,325.20. US gold futures for April delivery were down 30c at $1,330.90/oz.

Gold slid 1.3% on Tuesday, the most on any day since December 7, as a rise in US yields boosted the dollar and weakened the appeal of non-interest bearing gold. Benchmark 10-year treasury yields
hovered near a four-year peak on Tuesday.

Yields have risen after the US Treasury Department issued more debt in anticipation of a higher deficit from last year’s tax overhaul and a budget deal that will lift federal spending over the next two years.

Stocks fell in Europe on Wednesday, while the dollar rose 0.1% against the euro as traders’ near-term focus shifted to the Fed minutes. The minutes, due to be released at 7pm GMT, will be watched for comment on inflation pressures in the world’s biggest economy, which could speed up the pace of rate hikes.

Gold is highly sensitive to rising US interest rates, as these increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.

Interest in physical gold has been muted this week during the New Year holiday across much of Asia, including major consumer China.

The firm dollar and higher treasury yields are likely to keep the metal under pressure, however, it said.

On the investment side of the market, holdings at the world’s largest gold-backed exchange-traded fund, SPDR Gold Shares, rose 3.2 tonnes on Tuesday to 827.79 tonnes.

Among other precious metals, silver was flat at $16.45/oz.

Palladium was 0.8% lower at $1,025.10 and platinum was down 0.5% to $995.10.

Gold dips ahead of U.S. nonfarm payroll data

Global Stock Markets

Gold prices fell on Thursday after the Federal Reserve left interest rates unchanged but hinted at hikes later this year, and as investors awaited the U.S. nonfarm payroll data for cues on the health of the world's largest economy.

 
Spot gold was down 0.4 percent at $1,339.71 perounce, as of 0831 GMT. It touched $1,332.30 an ounce in the previous session, its lowest since Jan. 23.

U.S. gold futures for February delivery were nearlyflat at $1,339.00 per ounce.


The Fed said inflation is likely to quicken this year, bolstering expectations borrowing costs will continue to climb under incoming central bank chief Jerome Powell.

The dollar held steady against a basket of major currencies on Thursday after the Fed signaled its confidence about inflation and growth in the United States' economy, reinforcing views it will raise rates several more times this year.

Inflation worries generally boost gold, which is seen as a safe-haven against rising prices.

But expectations that the Fed will raise interest rates to fight inflation make gold less attractive because it does not pay interest.

A stronger dollar makes bullion more expensive for holders of other currencies, while higher interest rates lead to higher bond yields and dampen demand for non-yielding gold. Traders now await the jobs report on Friday that will include data on nonfarm payrolls to see if they offer more than a brief respite to the ailing dollar.

Spot gold is biased to break a resistance at $1,347 per ounce and rise towards the next one at $1,357, as it has stabilized around a support at $1,335.

In other precious metals, silver slipped 0.4 percent to $17.25 per ounce. Platinum declined 0.9 percent to$991.00 per ounce.

Palladium edged 0.8 percent lower to $1,019.50 perounce after falling to $1,013.72 earlier in the session, its lowest since Dec. 18.

Dow futures jump 183 points as stocks rebound from 2-day sell-off, Boeing soars

Global Stock Markets

The major indexes fell sharply in the previous two sessions, with the Dow falling more than 500 points in that time period. The Federal Open Market Committee is set to conclude its two-day monetary policy meeting on Wednesday.

U.S. stock index futures bounced back ahead of Wednesday's open, as investors awaited the decision from the latest Federal Open Market Committee (FOMC) monetary policy meeting.

Dow Jones industrial average futures rose 183 points, while S&P 500 and Nasdaq 100 futures gained 11.25 points and 27.50 points, respectively.

The major indexes fell sharply in the previous two sessions, with the Dow falling more than 500 points in that time period. Rising yields have also put stocks under pressure, elevating concerns over whether higher interest rates could snuff out the bull market.

On Wednesday, earnings, data and the U.S. Federal Reserve are set to be at the front of investors' minds.
The FOMC is expected to conclude its latest two-day policy meeting. While the Federal Reserve isn't expected to make any changes to its policy stance, the meeting will mark the last time Janet Yellen will act as chair of the central bank, before the role is passed on to Jerome Powell. The FOMC's meeting announcement is set to come out at 2 p.m. ET.

A number of data releases are set to be published. Ahead of Friday's nonfarm payrolls data, investors will be looking closely to jobs data Wednesday.

In earnings, Boeing shares jumped 3.6 percent in the premarket after reporting better-than-expected quarterly results. The move higher in the stock added to the Dow futures' gains. AT&T, eBay, Facebook, Microsoft, Mondelez International, PayPal, Qualcomm, and Symantec are some of the big names to release figures after the bell.

On the political front, investors are likely to be mulling over the latest State of the Union address, made by President Donald Trump on Tuesday night.

The overall theme of the incumbent's speech was "a safe, strong and proud America," with Trump touching upon topics such as immigration, bipartisan cooperation, infrastructure and the economy.

Stocks set for first week of gains in three, euro climbs

European Stock Markets

World stocks hovered below record highs on Friday, set to reverse two straight weeks of losses while the euro hit its highest levels in six weeks following stronger than expected economic data this week. 

The MSCI World Index, which tracks shares in 47 countries, was up 0.1 percent, set for a 1 percent gain this week. Its climb was underpinned by modest gains in Europe and Asia. 

Emerging stocks .MSCIEF were up 0.2 percent and the pan-European STOXX 600 was up 0.1 percent. .STOXX50

Surveys on Thursday covering Europe’s services and manufacturing industries outshone the most optimistic forecasts in Reuters polls, with factories having the second-best month in the index’s history.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was up 0.2 percent, as Hong Kong shares .HSI bucked the softness in mainland Chinese shares to gain 0.6 percent.
Stocks in mainland China dropped to three-month lows after big falls the previous day on concerns about fresh government steps to curb financial risks and rise in Chinese bond yields.

Japan's Nikkei .N225 ended up 0.1 percent after a market holiday on Thursday while U.S. stock futures ESc1 were little changed after shortened trading on Thursday.

In the currency market, the U.S. dollar remained under pressure after the minutes from the U.S. 

Federal Reserve’s latest policy meeting highlighted concern among some of the board members over persistently low inflation. The index that measures the greenback against a basket of peers was 0.2 percent lower. .DXY

The euro EUR= hit its highest in nearly two months at $1.1875 and was on track to mark its third consecutive week of gains despite failure of coalition talks in Germany earlier this week.

The leader of country’s Social Democrats is coming under growing pressure to drop his opposition to a new “grand coalition” with Chancellor Angela Merkel’s conservatives, with senior politicians arguing the party had a duty to promote stability.

A weaker dollar saw the British pound staying near a six-week high against the dollar ahead of British Prime Minister Theresa May’s visit to Brussels later in the day for talk on Brexit.[GBP/]

Chinese Stocks Fall, Other Asian Markets Mostly Quiet

Early strength in Hang Seng index dissipates. More new regulations and investors' preference for larger-cap companies pressured Chinese stocks, while activity was muted elsewhere in the region. Thursday is a holiday in Japan and the U.S. 

 
The Shenzhen Composite ended morning trading down 1.7% and the startup-heavy ChiNext slid 2% as Beijing took steps to halt the proliferation of small online lenders, days after saying it plans to streamline oversight of asset-management products sold by financial institutions.

Weak starts -- often attributed at least in part to regulatory concerns--followed by quick recoveries has become something of a habit in Chinese markets of late.

Some investors are rotating away from smaller-cap companies, which dominate the Shenzhen stock market, into large caps, more prevalent in Shanghai, said Caroline Yu Maurer, head of greater China equities at BNP Paribas Asset Management. "People are willing to pay for quality," she added.

The Shenzhen Composite, home to manufacturing and tech companies, has fallen 2.7% this week, dropping it into negative territory for 2017, a sharp contrast to the double-digit gains and multiyear or record highs achieved by many Asia markets.

On Thursday, selling in some so-called white-horse stocks--local jargon for blue chips--also weighed on sentiment, said David Millhouse, head of China research at Forsyth Barr Asia.

They have been under pressure for the past week, since the state-run Xinhua News Agency expressed concern about Kweichow Moutai (600519.SH) , which frenzied investors had turned into the world's most valuable liquor company. Shares in the maker of the traditional Chinese spirit baijiu fell 2.1% Thursday morning, putting the past week's skid at 11%.

Meanwhile, early strength in Hong Kong stocks withered into the lunch break there, with the Hang Seng finishing up 0.1% after earlier rising as much as 0.6%, a day after closing above 30000 for the first time in a decade.

Shane Chanel, an equities and derivatives adviser at ASR Wealth Advisers, said he is on watch for profit-taking after the recent gains in many Asian stock markets. He cautioned that markets could take a hit if U.S. tax-overhaul efforts are derailed.

In Australia, the S&P/ASX 200 was essentially flat ahead of the close as higher commodity stocks helped cushion weakness in banking stocks. The former got a boost from the U.S. dollar's worst session in eight months on Wednesday, which lifted commodities prices.

Oil futures were down 0.2% in Asian trading after the U.S. benchmark hit a 2 1/2 -year high on Wednesday.

Korea's Kospi was little changed even as tourist-related stocks like Lotte Tour and Amorepacific erased this week's declines. Investors there continue to assess the impact of fresh sanctions against North Korea.

The Japanese stock market closed Thursday for Thanksgiving, as will U.S. markets. If the yen holds on to its overnight gains, Tokyo stocks are likely to slip when trading resumes Friday, as a stronger yen hurts Japan's export-oriented companies. The yen hit a two-month high against the dollar , which was recently around Yen111.35, versus Yen112.20 when Japan equities trading ended Wednesday.

Asian shares up on Fed optimism, sterling firms ahead of expected BOE hike

Asian Stock Markets

Asian shares inched higher on Thursday after the U.S. Federal Reserve said economic growth was solid, virtually cementing the case for a December rate rise even as investors braced for what is expected to be the Bank of England’s first hike in more than 10 years.

Futures hinted at weaker openings for European bourses, with European stock futures STXEc1 down 0.2 percent while Dax futures FDXc1 and FTSE futures FFIc1 each shed 0.3 percent. CAC futures FCEc1 down 0.1 percent. 

Investors were wary as they awaited the nomination of the next head of the U.S. central bank, as well as a tax bill from squabbling Republicans in the U.S. House of Representatives. Both were expected later in the session. 

After a one-day delay, the tax plan is said to include $6 trillion in tax cuts over 10 years but is unlikely to define how these would be offset as Republicans remain split over how to pay for them.

The BoE is expected to raise rates later in the session (1200 GMT) to tamp down inflation, which has picked up to a five-year high despite weakening economic growth. 

But most economists polled by Reuters say a rate hike now would be a mistake as uncertainty builds ahead of Britain’s planned departure from the EU in March 2019. 

Sterling firmed 0.2 percent to $1.3282 GBP=D3 ahead of the decision. U.S. S&P e-mini futures ESc1 were down 0.2 percent.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was nearly flat in late afternoon trade, after earlier climbing to its highest levels since November 2007. 

Australian shares touched a two-and-a-half year high in early trade but reversed gains to close down 0.1 percent.

China's blue-chip CSI300 index .CSI300 was down 0.2 percent, while the Shanghai Composite Index .SSEC shed 0.4 percent. 

Japan's Nikkei stock index .N225 finished up 0.5 percent at its highest close since late June 1996, gaining 2.4 percent in a holiday-shortened week. Japanese markets will be closed for a national holiday on Friday. 

The White House plans to nominate current Fed Governor Jerome Powell as the next chair when Janet Yellen’s term expires in February, a source familiar with the matter said on Wednesday.

Powell likely next Fed chief, though Yellen best suited: economists

Jerome Powell likely will be the next Federal Reserve chairman, according to a slim majority of economists in a Reuters poll - but most of them said current Fed Chair Janet Yellen would be the best option.

Just over half the 40 economists who participated in the survey, taken in the past few days, tipped Fed Governor Powell to be appointed chair by U.S. President Donald Trump when Yellen’s current four-year term ends on Feb 1, 2018. 

Powell, a lawyer and former investment banker, has served as a member of the Fed’s Board of Governors since May 2012. 

The next most likely choice was Kevin Warsh, who served as a Fed governor during the financial crisis, with 13 forecasts. Yellen received only four.

Also on the list of options, alongside being able to suggest someone else, was Trump’s top economic adviser Gary Cohn, the former chief executive of U.S. Bancorp Richard Davis, Columbia Business School’s Glenn Hubbard, former head of BB&T John Allison and Stanford University professor John Taylor.

When asked who would be the best choice, around two-thirds said Trump should allow Yellen to remain in place. Powell was in second place with seven of 37 votes. 

There is little daylight between his and Yellen’s thinking and none of the economists polled said Powell would implement the most radical change in policy. 

Instead they said Taylor would make the biggest change. Taylor is the author of an interest-rate forecasting model named after him in which rates are tied to inflation and growth. In line with this rule, he has long argued the Fed has kept rates too low for too long because of the risk of unwanted inflationary pressures. 

The Fed has slowly increased borrowing costs and is expected to raise rates again in December and follow that up with more hikes next year.

However, minutes from September’s Federal Open Market Committee meeting revealed policymakers remained divided over the slow pickup in inflation, raising doubts over the future path of interest rate hikes. 

An inflation index closely watched by the Fed - the core PCE price index - has been below the central bank’s medium-term target of 2 percent for more than five years. 

Trump said late last month he would make a choice “over the next two or three weeks” on who will lead U.S. monetary policy. He has met with four candidates, but his chief of staff said last week he was still some time away from making a decision. 

In July, Trump said he might decide to renominate Yellen for a new four-year term, or turn to Cohn. He met with Taylor on Wednesday to discuss the job.

FED MINUTES

The dollar was also under pressure amid ongoing uncertainty over who will be the next Federal Reserve chair, with the predictions market site, PredictIt, favouring Fed Governor Jerome Powell as the most likely candidate. 

While Powell is regarded as more hawkish than incumbent Janet Yellen, whose term expires in February, analysts say he probably wouldn’t look to unwind stimulus as aggressively as some of the candidates on the list. 

Dallas Federal Reserve Bank President Robert Kaplan, who votes this year on Fed policy, had also said overnight that he wants to see more signs of upward inflation before raising interest rates again. 

The weaker dollar continued to help commodities. U.S. crude CLcv1 rose 19 cents to $51.11 per barrel and Brent LCOcv1 added 13 cents to $56.74, also on signs of tighter near-term supply.

Gold prices hovered around their highest in two weeks, with spot gold XAU= at $1,289.06 an ounce, while industrial bellwether metal copper was just below a 1-month high.