【TOP1 Morning】Gold fell to 1850, Dollar retreats, Oil prices steady as virus deaths rise, demand worries persist

Yesterday Market Review

Gold

Gold fell on Tuesday as a slightly firmer dollar and uncertainty over a U.S. stimulus package kept bullion under pressure, with investors awaiting cues on future monetary policy decisions from the U.S. Federal Reserve.

The spot gold closed at $1850.59 per ounce; the volatility within the day is $1848.25-$1861.59.

"Gold is waiting for the Fed, it is waiting for a solid thing to emerge, and as long as we continue to see the strength we've seen in stock markets over the past couple of weeks, the focus on safe havens is not as strong," said Saxo Bank analyst Ole Hansen.

"The Fall in bond yields yesterday helped offset some of that nervousness that crept into the market from potential inability to reach a (U.S. pandemic relief) deal. If they do reach a deal, it might be a watered-down version to get it through Congress, so that's also weighing on the gold market."

U.S. President Joe Biden's $1.9 trillion pandemic relief proposal faces hurdles as Republicans objected to it for being too expensive and pushed for a smaller plan targeting vaccine distribution.    

The silver closed at $25.431; the volatility within the day is $25.173-$25.635.

Forex

The U.S. dollar fell across the board as riskier currencies found a firmer footing on Tuesday, a day after worries over vaccine rollouts and the outlook for U.S. fiscal stimulus boosted demand for safe-havens.

The U.S. dollar index closed at 90.17; the volatility within the day is 90.09-90.60.

The dollar appeared to be taking its cue from overall risk sentiment in the market, said Michael Brown, senior analyst at payments firm Caxton, in London.

Data on Tuesday showed U.S. consumer confidence rose moderately in January amid lingering concerns about the COVID-19 pandemic.

"There is also probably a lack of appetite to be buying the dollar before what's likely to be another dovish Federal Open Market Committee (FOMC) meeting tomorrow," Brown said.

Few if any changes are expected to the Fed's policy statement on Wednesday after its two-day meeting and no new economic forecasts are scheduled to be released.

The euro was higher on the day, but gains were muted amid early signals that the economy may not rebound as strongly this year as predicted. Germany's Ifo business climate indicator undershot expectations on Monday and an economic surprise index in Europe is near six-week lows.

On Tuesday, the Australian dollar - seen as a liquid proxy for risk - was 0.48% higher against the dollar; the New Zealand dollar was up 0.65%.

Sterling pulled away from a one-week low against the dollar and also gained ground against the euro as rebounding risk appetite in broader asset markets weakened the U.S. currency.

Crude Oil

Oil prices were little changed on Tuesday as rising coronavirus deaths fed worries about the global demand outlook, but losses were capped by reports of a blast in Saudi Arabia.

West Texas Intermediate crude settled at$52.671, the volatility within the day is $52.252- $53.189. International benchmark Brent crude closed at $55.716, the volatility within the day is $55.161-$56.069.

Indonesia, the world's fourth-most-populous country, surpassed a million confirmed coronavirus cases on Tuesday while the death toll in Britain passed 100,000 people as the government battled to speed up vaccination delivery and keep variants of the virus at bay.

Further dampening bullish sentiment, U.S. Democrats are still trying to convince Republican lawmakers of the need for more stimulus, raising questions over when and in what form a package will be approved.

"Big COVID numbers, vaccine struggles and uncertainty surrounding the Biden stimulus plan, are all conspiring to pressure prices," said Robert Yawger, director of energy futures at Mizuho Securities USA.

Prices edged up briefly after reports of a blast in the Saudi Arabian capital Riyadh, although the cause was unclear.

Oil prices were also supported by geopolitical tensions after two supertankers, with crew members from Iran and China, were seized on Sunday in Indonesian waters near Kalimantan island for suspected illegal oil transfers.

"Prices are likely to hold back if the Indonesian vessel seizure gets resolved quickly and if today's blast in Saudi Arabia proves to be an isolated incident that does not escalate regional tensions, consequently not affecting oil output," said Rystad Energy's head of oil markets Bjornar Tonhaugen.

Stocks

Stocks ended lower on Wall Street Tuesday after spending most of the day in the red as investors weighed solid corporate earnings results against growing concerns about the pandemic.

The S&P 500 fell 5.74 points, or 0.1%, to 3,849.62. The Dow Jones Industrial Average fell 22.96 points, or 0.1%, to 30,937.04. The Nasdaq fell 9.93 points, or 0.1%, to 13,626.06.

Microsoft stock rose as much as 6% in extended trading on Tuesday after the company reported fiscal second-quarter earnings Azure cloud revenue growth and quarterly revenue guidance that exceeded analysts' expectations. 

Microsoft revenue grew 17% on an annualized basis, up from 12% growth in the prior quarter.

Starbucks said its U.S. same-store sales fell 5% in its latest quarter, while same-store sales in China turned positive for the first time since the pandemic began.

The company also announced that COO Roz Brewer will be leaving the company at the end of February. She will become the next CEO at Walgreens.

AMD stock was flat in extended trading after the company announced revenue and earnings that beat Wall Street's already high expectations for the chipmaker.

One highlight was AMD's embedded segment for server CPUs and game console chips which was up 176% year-over-year to $1.28 billion.

AMD revenue was up 45% in 2020, and the company said it expects 37% revenue growth in 2021.

Focus Today:

15:00 (GMT+8): Germany GfK Consumer Confidence (FEB), Forecast: -7.9, Previous: -7.3;

21:30 (GMT+8): United States Durable Goods Orders MoM (DEC), Forecast: 0.9%, Previous: 0.9%;