【Market Evening】Dollar hits new high on yen, Gold hovers near 2-week low, Oil slips
Asian markets mixed after late slump on Wall Street; Gold hovers near 2-week low as Powell renomination buoys dollar; Oil slips on plans to tap emergency crude reserves.

Gold hovers near 2-week low as Powell renomination buoys dollar
Gold prices held close to a more than two-week low on Tuesday, as the dollar jumped on bets for quicker interest rate increases after U.S. President Joe Biden backed Federal Reserve Chair Jerome Powell for a second term.
Spot gold fell 0.39% to $1797.11 per ounce and spot silver fell 1.05%to $23.89 per ounce by 17:30(GMT+8).
The dollar index hit a 16-month peak after Powell's nomination to the top job at the Fed on Monday, raising bullion's cost to buyers holding other currencies. read more
"There isn't going to be any sudden hawkish shift due to the nomination, but a continuation of current policy with a quicker taper tabled by officials last week," said Stephen Innes, managing partner at SPI Asset Management, adding, gold's fall was more of a 'knee-jerk' reaction to the dollar. read more
Higher interest rates increase the non-interest bearing metal's opportunity cost.
Technically for gold, "$1,780 on the downside should be well defended and on the upside we need to see a sustainable close above $1,830-1,850 for its bullish momentum to resume," said Harshal Barot, a senior research consultant for South Asia at Metals Focus.
Investors also kept tabs on rising COVID-19 cases in parts of Europe which prompted restrictions. read more
"The COVID resurgence in Europe may cause central banks to back off rate hike expectations and there's still some need for gold in this kind of environment," SPI's Innes said, adding, that the FOMC's final make-up with three nominations still pending could also affect gold's trajectory. read more
"As silver broadly follows gold's trajectory, we need to see sustainable bullish momentum in gold for silver to rally and potentially outperform gold," Metals Focus' Barot said.
Platinum fell 0.1% to $1,010.34, while palladium rose 1.4% to $1,980.69.
Oil slips on plans to tap emergency crude reserves
Oil prices fell on Tuesday, reversing gains the previous session on talk the United States, Japan and India will release crude reserves to tame prices despite the threat of faltering demand as Covid-19 cases flare up in Europe.
The United States is expected to announce a loan of crude oil from its emergency stockpile on Tuesday as part of a plan it hashed out with major Asian energy consumers to lower energy prices, a Biden administration source familiar with the situation said.
Brent crude oil fell 0.85% to $78.16 a barrel, while U.S. West Texas Intermediate (WTI) crude fell 1.16% to $75.41 by17:30(GMT+8).
“U.S. President Biden is said to be preparing to announce a release of oil from its strategic petroleum reserve in concert with several other countries ...,” ANZ said in a note.
Brent and WTI had both risen 1% on Monday on reports the Organization of the Petroleum Exporting Countries, Russia and their allies, an alliance known as OPEC+, could adjust their plan to raise oil output if large consuming countries release crude from their reserves or if the pandemic dampens demand.
With talk of a coordinated crude release having succeeded in driving prices back below $80 a barrel and an actual release only expected to have a temporary impact, analysts are turning their attention to the potential hit to demand from a fourth wave of Covid-19 cases in Europe.
“With speculative positioning somewhat more balanced, international travel reopening and lifting fuel demand, and with OPEC+ constraints in mind, any further sell-offs are likely to be short-term in nature and not sustained,” said Jeffrey Halley, senior market analyst at OANDA.
He said only Europe could pressure prices and bearish bets should be off if the Northern Hemisphere experiences a cold winter.
“As Europe, and in particular Eastern Europe, struggles to halt the spread of Covid-19, the risk of lockdown-like measures looms large,” said Rystad Energy analyst Louise Dickson.
She said demand in November for road and jet fuel in Europe was expected to fall to 7.8 million barrels per day (bpd) from 8.1 million bpd in October, although part of that is a normal decline for this time of year.
“If a new wave of lockdowns are enacted in Europe, oil prices will not be spared during the remainder of the flu season in the North Hemisphere,” Dickson said in emailed comments.
Dollar hits new high on yen as Powell reappointment firms hawkish Fed bets
The dollar hit a new four-and-a-half-year top against the yen on Tuesday after Federal Reserve Chair Jerome Powell was renominated for a second term, reinforcing bets that U.S. interest rates would rise next year and diverge from Japan’s.
The greenback rose as much as 0.24% to 115.13 yen , its highest since March 2017, having jumped 0.77% on Monday.
“We expect the weak JPY narrative to continue finding support amid attention to monetary policy divergence,” Barclays analysts said in a note.
The dollar hit a new four-and-a-half-year top against the yen on Tuesday after Federal Reserve Chair Jerome Powell was renominated for a second term, reinforcing bets that U.S. interest rates would rise next year and diverge from Japan’s.
The greenback rose as much as 0.24% to 115.13 yen , its highest since March 2017, having jumped 0.77% on Monday.
“We expect the weak JPY narrative to continue finding support amid attention to monetary policy divergence,” Barclays analysts said in a note.
Asian markets mixed after late slump on Wall Street
Asian shares were mixed Tuesday after a late drop left major Wall Street indexes mostly lower.
Tokyo markets were closed Tuesday for a holiday.
Hang Seng Index fell 1.20% to 24,651.58.
Taiwan capitalization weighted stock fell 0.77% to 17,666.12.
S&P/ASX 200 rose 0.78% to 7,410.60.
South Korea KOSPI fell 0.53% to 2,997.33.
Market players appeared to be relieved to learn that President Joe Biden will nominate Jerome Powell for a second four-year term at the helm of the Federal Reserve, a vote of confidence in Powell’s handling of central bank policies during the brutal disruptions caused by the coronavirus pandemic.
Investors are closely watching the Fed to see whether pressure from rising inflation prompts it to speed up its plans for trimming bond purchases and raising its benchmark interest rate.
“Powell getting the nod is a sign that Biden is staying the course on monetary policy and the Fed is steadily moving toward normalizing policy,” said Brad McMillan, chief investment officer for Commonwealth Financial Network. “On the whole, the Fed is going to continue to be a force for monetary stability.”
Markets in the U.S. will be closed on Thursday for the Thanksgiving holiday. They will also close early on Friday.
Bonus rebate to help investors grow in the trading world!