【TOP1 Morning】Gold ends near a 9-month low, as rising bond yields, Oil jumps more than 2%

Yesterday Market Review

Gold

Gold slid more than 2% to its lowest in nearly nine months on Wednesday as elevated U.S. Treasury yields and a stronger dollar hammered the metal's appeal.

The spot gold closed at $1710.79 per ounce; the volatility within the day is $1701.82-$1740.37.

The silver closed at $26.060; the volatility within the day is $25.817-$26.806.

"As real rates continue to rise, that's challenging gold. The rates markets are also adding pressure on valuations for all asset classes, and as a result, gold is a casualty," said TD Securities commodity strategist Daniel Ghali.

Benchmark U.S. 10-year Treasury yields crept back towards a one-year peak reached last week, while the dollar rose.

Hopes of a quick economic rebound fuelled by a swift rollout of COVID-19 vaccines also prompted an outflow of safe-haven assets like gold from investors' portfolios.

Progress on the $1.9 trillion U.S. stimulus bill has offered little respite, as higher yields have threatened gold's appeal as an inflation hedge by increasing the opportunity cost of holding bullion.

"The outlook for gold is tied really to whether or not we've reached that pivot point at the U.S. Federal Reserve in terms of whether they would address the steepening of the yield curve. But we're still early in that process, so that has negative short-term implications on gold," Ghali said.

Forex

The safe-haven U.S. dollar remained broadly weaker on Wednesday as Treasury yields retreated further, restoring some calm to global markets and reigniting demand for riskier assets.

The U.S. dollar index closed at 90.99; the volatility within the day is 90.64-91.07.

The Aussie rose slightly to $0.7820, building on gains of about 0.7% the previous two days, after data showed the Australian economy grew much faster than expected in the fourth quarter.

"Risk sentiment dynamics are the key driver of currencies in general right now," said Shinichiro Kadota, senior currency strategist at Barclays Capital in Tokyo.

 "Equity market reaction will be one of the key determinants of the impact of this move in global rates on FX markets."

Earlier on Tuesday, the Reserve Bank of Australia recommitted to keeping interest rates at historic lows.

Meanwhile, European Central Bank board member Fabio Panetta said the bloc's monetary authority should expand bond purchases or even increase the quota earmarked for them if needed to keep yields down.

The euro was little changed at $1.20880 after rising more than 0.3% in the previous session, when it rebounded from an almost one-month low below $1.20. 

Crude Oil

Oil prices rose more than 2% on Wednesday, boosted by a huge drop in U.S. fuel inventories and expectations that OPEC+ producers might decide against increasing output when they meet this week.

West Texas Intermediate crude settled at $60.923, the volatility within the day is $59.155-$61.859. International benchmark Brent crude closed at $63.723, the volatility within the day is $62.268-$64.546.

U.S. gasoline stocks fell last week by the most on record and refining output fell to a record low in the wake of a deep freeze in Texas that shut production.

Gasoline inventories fell to 243.5 million barrels, the U.S. Energy Information Administration said, while distillate stockpiles fell by the most since 2003 to 143 million barrels.

Earlier, oil prices jumped after Reuters, citing three sources, reported that the OPEC+ group comprising the Organization of the Petroleum Exporting Countries and allies including Russia is considering rolling over production cuts from March into April rather than raising output.

Stocks

Tech stocks dragged down the S&P 500 on Wednesday amid rising bond yields, while names tied to an economic recovery provided the market with some support.

The S&P 500 fell 1.3% to 3,819.72, led by tech and consumer discretionary. The Nasdaq Composite slid 2.7% to 12,997.75 as Apple, Amazon, Microsoft and Alphabet all dropped more than 2%. Netflix shed 5%.The Dow Jones Industrial Average ended the day near its session low, dipping 121.43 points, or 0.4%, to 31,270.09.

Tesla closed down more than 4.8% to $653.20.

Tesla Inc.'s Model 3 sales appear to be taking off in Japan since it cut prices on the mid-range electric sedan last month.

Tesla cut the price of the long-range version of the Model 3 by 24% last month to 4.99 million yen ($46,700), putting it in reach of consumers seeking to buy low-end luxury vehicles. With Japan's government pushing to ban sales of cars with gasoline-only engines by the mid-2030s, Tesla's price cut is putting Japan's automakers on notice for a potential price war in the world's third-largest car market.

Rocket Companies – The online mortgage provider's stock dropped close to 20% after a surprise rally in the previous session as analysts urged caution in the heightened speculative trading in the shares. The stock soared more than 70% Tuesday for its best day ever on no apparent news. Rocket is one of the most heavily shorted names by hedge funds, which may have made it attractive to the Reddit trading crowd.

Growing optimism over the vaccine rollout sparked a rally in cyclical stocks and reopening plays. American Airlines popped 3.4%, while Carnival and Norwegian Cruise Line jumped 3.9% and 6.3%, respectively. The energy sector rose 1.4%.

"While the S&P 500 may be facing structural head-winds due to tech weakness, much of the rest of the market is actually doing quite well," Tom Essaye, founder of Sevens Report, said in a note. "Overall, most non-tech stocks are weathering the increase in bond yields quite well."

Focus Today

21:30 (GMT+8): United States Non-Farm Payrolls (FEB), Forecast: 182K, Previous: 49K;