Destabilizing speculation

Gold is higher – Moneyweb


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Gold rose as fears of a debt spillover from Asian real estate developer China Evergrande Group fueled demand for safe-haven securities, outweighing fears that the Federal Reserve’s cutback in stimulus measures could take hold. produce soon.

US stocks fell more than 2% as investor angst worsened over the Chinese real estate sector and the weakening of the Fed. The dollar hit its highest level in nearly a month as Treasury yields fell, boosting demand for non-interest bearing bullion.

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“Gold actually acts like gold. It’s about buying flights to safety amid concerns about the severity of the news coming out of China this weekend, ”said Bob Haberkorn, senior market strategist at RJO Futures. “If there are full spillovers, they are going to spill over into the markets.”

Evergrande will have interest payments on its two banknotes due Thursday, a key test of whether the Chinese real estate giant will continue to meet its obligations to bondholders even if it falls behind on payments to banks , suppliers and owners of onshore investment products. Investors will also be looking for clues to Xi Jinping’s government’s willingness 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 on Tuesday as he considers cutting stimulus measures, while trying to avoid speculation that such a change portends a rise in interest rates. Fed officials are expected to signal a start to cut bond buying, and economists polled by Bloomberg see that index followed by an official announcement in November.

The traditional safe haven has lost 8% this year as central banks scramble to cut the unprecedented monetary stimulus that has been put in place to save economies from the impact of the pandemic.

Markets are even more uncertain about the prospects for President Joe Biden’s $ 4 trillion economic program, as well as the need to raise or suspend the US debt ceiling. Treasury Secretary Janet Yellen says US government will run out of cash to pay bills in October without debt ceiling action, warning of “economic catastrophe” unless lawmakers take action required.

Spot gold rose 0.4% to $ 1,761.83 an ounce at 2:21 p.m. in New York City, after hitting its lowest intraday level since August 12. Bullion futures for December delivery rose 0.7% to $ 1,763.80 on Comex. The Bloomberg Dollar Spot Index rose 0.2%. Silver and platinum have fallen.

Palladium fell to its lowest since June amid fears that a global chip shortage among automakers will slow growth in demand for car catalytic converters, which are the biggest users of the metal limiting the cost. emissions.

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