Gold Eases on Firmer Dollar, Yields
Gold eased from a three-month peak in early trade in Asia on Thursday, trading around $1,820 an ounce, amid a stronger dollar and soaring US Treasury yields. Recent data showed US inflation was running at its highest level in over a decade, while the yields on 10-year rates hit monthly highs of 1.622%, heightening concerns that the Federal Reserve may have to tighten monetary policy sooner and more abruptly than expected to prevent the economy from overheating. However, some dovish comments from Richard Clarida, Federal Reserve’s vice chair, helped calm nervous markets. He noted that the twin shocks of a disappointing payroll report and higher inflation in April hadn’t changed the central bank’s view on maintaining its current ultra-accommodative policy. Aside from economic headlines, the precious metal continues to benefit from safe-haven demand stemming from the ongoing coronavirus crises as infection rates continue to accelerate in India.
China Shanghai Composite Trade Lower
The Shanghai Composite Index fell 16 points or 0.5% to 3,447 in early deals on Thursday following the negative cues from Wall Street overnight, with the Dow Jones plunging to four-week lows, as traders weighed whether higher-than-expected price pressures could prompt the Fed to tighten monetary policy sooner than expected. The annual inflation rate in the US jumped to 4.2%, the highest in 13 years and well above forecasts of 3.6%. Risk appetite was also dented by reports that Chinese banks extended fewer loans in April as the PBoC continues with policy normalization while maintaining support for smaller firms. Meantime, a US Senate committee voted to pass a measure authorizing over $110 billion for basic and advanced technology research over five years amid rising competitive pressure from China. In business news, Tesla said Wednesday that it supports the standardization of China’s auto industry. Losers were almost broad-based, led by basic materials, energy, and consumer staples.
Oat Hits 6-week Low
Oat decreased to a 6-week low of 370 USd/Bu
Crude Oil Prices Hold Near 2-Month Highs
Crude oil prices traded flat in early APAC trade on Thursday, following gains of more than 1% to near 2-month highs in the previous session after EIA data showed US crude oil inventories fell by 0.427 million barrels in the May 7th week, the second consecutive week of declines. Meantime, Colonial Pipeline restarted operations Wednesday after a ransomware attack last week forced the entire system offline on Friday evening. Adding to the bullish tone, the International Energy Agency predicted demand for oil will outstrip supply as economies emerge from the pandemic. Meantime, OPEC said it expects demand to rise by 5.95 million bpd this year, unchanged from its forecast last month supported by vaccinations against Covid-19 despite waves of infections in India and Brazil. On Wednesday, Brent futures rose 77 cents, or 1.1%, to settle at $69.32 a barrel, while WTI crude rose 80 cents, or 1.2%, to settle at $66.08.