Gold looks to inflation data
Gold trades under pressure on Monday, extending losses from Friday, although it appears to lack strong follow-through. The firmer greenback, which has received a lift from 10-year Treasury yields, is exerting pressure on the US dollar-denominated precious metal, making it more expensive for buyers with foreign currencies.
Federal Reserve Jerome Powell’s upbeat assessment of the US economy boosted the US dollar on Monday. Fed Chair Powell is optimistic that the US economy will make a strong recovery with increased growth providing more jobs. His comments reinforced expectations of a faster rebound from the pandemic, lifting the US dollar whilst dragging on gold.
Inflation expectations have been a central focus for the markets over the past few months. After data on Friday revealed a strong pick up in the producer price index, which measures inflation at a wholesale level, investors will be eyeing consumer price inflation, CPI data tomorrow closely. , g
Oil keeps an eye on Iran talks
After recording losses of 3.5% across the previous week, oil prices are holding steady on Monday. There have been no significant changes to fundamentals, with the bulls and the bears continuing to weigh up the resurgence of Covid and tighter lockdown restrictions in parts of Europe, India and South America against an expected strong US economic rebound and the prospect of OPEC releasing more oil into the markets from next month.
Also playing into the mix are talks between Iran and world powers over reviving the 2015 nuclear accord. These talks are important because progress towards an acceptable outcome would likely mean the OPEC member would be once again allowed to supply crude to the global market.
Talks continue on a positive note after Tuesday’s breakthrough, and full-scale talks at the level of foreign ministry deputies will recommence on Wednesday.
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