【TOP1 Morning】Gold slips, Dollar falters, along with yields on U.S. treasuries, Oil rises slightly

Yesterday Market Review

Gold

Gold slipped 1% on Monday, with a dip in the dollar and U.S. Treasury yields offering little respite as U.S. equities gained, which dulled bullion's appeal.

The spot gold closed at $1738.39 per ounce; the volatility within the day is $1727.16-$1742.94.

The silver closed at $25.724 the volatility within the day is $25.392-$25.939.

"Gold should be higher yet it's not. That really speaks to a weak market if normal correlations (like a weaker dollar) are not holding up," said David Madden, analyst at CMC Markets U.K., adding gold could slip further if the dollar and yields advance.

Gold fell as much as 1% during the session as investors flocked to the dollar and government bonds, spooked by Turkey's decision to replace its central bank head with a critic of high-interest rates. 

Gains on Wall Street also pressured gold.  

"Traders want to see gold above $1,750 and hold there before you start to see new money coming into this trade," said Bob Haberkorn, senior market strategist, RJO Futures, adding the U.S. Federal Reserve's low-interest rate policy could boost prices by year-end.  

Forex 

The U.S. dollar stumbled from four-month highs against a basket of currencies on Monday, in line with a dip in U.S. Treasury yields.

The U.S. dollar index closed at 91.82; the volatility within the day is 91.70-92.17.

A crisis with the Turkish lira over the weekend remained largely contained in emerging markets.

The yield on U.S. Treasuries fell off 14-month highs on Monday and was last down at 1.682%, but remained near one-year highs as investors bet on an economic recovery.

Yields had jumped after the Federal Reserve last week said the U.S. economy was on track for strong growth. Investors are now looking ahead to a Treasury auction later this week, which could send yields rising again if demand is anemic, analysts said.

Even with the greenback's dip on Monday, markets have been slow to catch on to the rising dollar theme in recent weeks as investors had bet a global economic recovery would prompt buying of riskier currencies.

The pound was roughly flat against the dollar as investors focused on broader currency market drivers and the European Union's threat to impose a ban on vaccine imports to Britain.

Oil

Oil steadied on Monday as hopes for a pick-up in demand later this year helped arrest last week's broad sell-off, but prices stayed under pressure as new European coronavirus lockdowns made a quick recovery look less likely.

West Texas Intermediate crude settled at $61.242, the volatility within the day is $60.309-$62.001. International benchmark Brent crude closed at $64.177, the volatility within the day is $63.317-$64.921.

"Oil (had) its worst week this year as concerns grow over a flaring up in COVID-19 cases across Europe," Dutch bank ING said in a note. "This comes at a time when there are clear signs of weakness in the physical oil market."

Physical markets have come under pressure as refiners around the world, including China and the United States, begin maintenance activities.

Nearly a third of French people entered a month-long lockdown on Saturday, while Germany plans to extend its lockdown into a fifth month, according to a draft proposal.

British Prime Minister Boris Johnson warned on Monday that the third wave of COVID-19 infections sweeping across Europe could be heading towards Britain.

"Vaccination campaigns haven't been as fast as the market had hoped for and consequently this will have an effect on the oil demand recovery, which in turn hurts prices," said Louise Dickson, oil markets analyst at Rystad Energy.

"While I think demand is going to improve further as more economies ease travel restrictions in the coming months, the impact of this will be offset to some degree by rising oil supply," Fawad Razaqzada, market analyst at ThinkMarkets said.

"OPEC+ will be easing supply restrictions slowly, while U.S. shale production is likely to ramp up due to the attractive oil prices again. All told, I can't see oil prices rising significantly further."

Stocks

U.S. stocks jumped on Monday led by technology shares as investors flocked back into growth names amid declining bond yields.

The tech-heavy Nasdaq Composite gained 1.2% to 13,377.54 as the 10-year Treasury yield retreated. The S&P 500 rose 0.7% to 3,940.59, breaking a two-day losing streak. The Dow Jones Industrial Average climbed 103.23 points, or 0.3%, to 32,731.20.

Shares of Tesla added 2.3% as rates fell and as Cathie Wood's Ark Invest put out a new price target on the stock which calls for it to quadruple in four years. Apple, Microsoft and Netflix all gained at least 2%, while Amazon and Facebook climbed more than 1% each.

 "After the reopening exuberance fades and interest rates level off, investors will rotate back into large cap technology stocks with strong free cash flow, recurring revenues and increasing user penetration," said Richard Saperstein, chief investment officer at Treasury Partners.

Industrials got a boost after the New York Times reported that President Joe Biden is eyeing an infrastructure deal with as much as $3 trillion spending to boost the economy. Most Wall Street firms including Goldman Sachs were expecting around $2 trillion on infrastructure spending. Shares of Caterpillar traded into the green following the news and closed the session 0.3% higher.

Still, optimism about the markets and the economic recovery has been growing as vaccines roll out across the country, with the pace of Americans getting shots climbing in recent weeks.

U.S. trial data released Monday showed the Covid vaccine developed by AstraZeneca and the University of Oxford is 79% effective in preventing symptomatic illness and 100% effective against severe disease and hospitalization.

Focus Today

15:00(GMT+8): United Kingdom Employment Change (DEC), Forecast: -167K, Previous: -114K;