Overnight, gold prices inched higher for the first time in five sessions on Tuesday, as investors continued to weigh up prospects for future USA interest rate increases following the latest comments from Federal Reserve officials. Hong Kong’s Hang Seng was flat at 23,223.42, and Australia’s S&P/ASX 200 gained 0.1 percent to 5,212.50. That all came to naught yesterday after the reliable ‘dove, ‘ Fed governor Brainard, said that the U.S. should take care to avoid ending up in the same economic predicament as Japan and the eurozone.
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Investors have been closely eyeing every piece of economic data and parsing through every speech made by fed officials, trying to find clues about what the central bank’s decision on monetary policy will be. In its September oil market report, the Paris-based International Energy Agency reduced its forecast for global demand growth to 1.3 million barrels a day in 2016 – 100,000 below the previous forecast. Australia’s dollar rose 0.2 percent to 74.82 USA cents, after tumbling 1.4 percent in NY, the most since June 27. Brent crude, the benchmark for global oil trading, lost 56 cents to $47.76 a barrel in London.
Lastly, markets now look ahead to a data light session on Tuesday, highlighted by the Treasury budget statement, followed by retail sales, producer prices, consumer prices, Philadelphia Fed and Empire manufacturing releases later in the week. Lael Brainard added her name to the latter on Monday, dealing a major blow to hike chances this month and driving down the implied probability of one in the markets to only 15%. Had she signaled a change of heart, it might have convinced investors that a hike was coming next week, especially after another dove, Boston Fed chief Eric Rosengren, said on Friday that there’s case for higher rates. It fell $1.39, or 3 percent, to $44.90 a barrel in NY on Tuesday.
BONDS: U.S. government bond prices slipped. US stocks were poised for a solid opening, with Dow futures and the broader S&P 500 futures both up 0.2 percent.
Tesla Motors rose 2.0 percent after announcing that it upgraded its Autopilot software to use more advanced radar technology. Against the yen, the dollar inched up 0.1 percent to 101.96 yen, after falling 0.8 percent on Monday. Ten-year yields dipped 1 bps to 1.66 percent.
In currency markets, the US dollar reversed early gains against the yen as traders doubted that the Bank of Japan would be able to weaken the yen with more policy stimulus at its policy meeting next Wednesday.
In Asia, the Japanese 225 Nikkei index rose with 0,32%, while the South Korean stock exchange closed at 0,4%.
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A loose monetary-policy stance is positive news for gold bulls as the metal, which doesn’t pay interest, is typically more appealing in a low-rate environment.
