【Market Evening】Oil rallies towards $73, Gold firms on growth risks, Risk currencies cap dollar gains
US Biden and China's Xi hold first call in seven months; Gold firms on growth risks; Yuan, risk currencies cap dollar gains after Sino-U.S. talks; Oil rallies towards $73 on tight U.S. supplies.

Gold firms on growth risks
Spot gold price bounced above $1,800 on Friday, buoyed by bets that central banks may keep interest rates relatively low to stave off lingering growth risks.
But an overall uptick in the dollar, while investors tried to gauge the timing of the U.S. Federal Reserve’s taper timeline, kept bullion on course for a weekly decline.
Spot gold rose 0.41% to $1801.33 per ounce and spot silver rose 0.78% to $24.23 per ounce by 17:30(GMT+8).
Facilitating gold’s advance, the dollar was a tad softer on the day, making bullion more appealing for those holding other currencies, but the greenback was still bound for a weekly rise.
Gold continues to remain a buy on dips because central banks are in no hurry to raise interest rates, said Stephen Innes, managing partner at SPI Asset Management.
“Growth is still a really big concern for central banks.”
Gold investors closely followed cues from the Fed, since non-yielding bullion tends to gain when interest rates are low, while some consider bullion a hedge against higher inflation fuelled by massive stimulus.
And the signals were mixed, with a recent Fed report showing the U.S. economy “downshifted slightly” in August. But a number of Fed officials said this week the August slowdown in job growth would not throw off plans to reduce asset purchases this year.
Despite elevated macro risks, the Fed is unlikely to take 2021 taper off the table and gold should head lower in the fourth quarter, around $1,700, Citi Research said in a note.
Yuan, risk currencies cap dollar gains after Sino-U.S. talks
The dollar edged lower on Friday as pro-growth currencies gained following a rise in the Chinese yuan to a one-week high on news that U.S. President Joe Biden and Chinese leader Xi Jinping spoke for the first time in seven months.
In a statement, the White House said Biden and Xi had “a broad, strategic discussion”, including areas where interests and values converge and diverge. The conversation focused on economic issues, climate change and COVID-19, a senior U.S. official told reporters.
The yuan gained 0.2% on the dollar after the news, moving away from the key 6.50 yuan per dollar level to 6.4387 - its highest since Sept. 3.
“We have seen USD/CNH go offered on the news and any surprise improvement/reset in U.S.-China relations could see USD/CNY move further away from the key 6.50 threshold,” said ING strategists in a morning note to clients.
“Such a move is typically positive for pro-cyclical FX and slightly negative for the dollar - hence our down arrow in the dollar today.”
The Australian dollar gained 0.35% to $0.7392, heading for a 0.7% slide this week.
The Japanese yen lost 0.2% against the dollar to 109.97 yen while still meandering in the middle of its range of the past two mon
The dollar index, which measures the greenback against six major peers, was down 0.1% on the day at 92.421, although still on course for a 0.35% weekly rise.
The euro was 0.1% higher at $1.1838 on Friday, on track for a 0.35% decline this week.
Oil rallies towards $73 on tight U.S. supplies
Oil rose towards $73 a barrel on Friday, supported by growing signs of supply tightness in the United States as a result of Hurricane Ida and as U.S.-China trade hopes gave riskier assets a boost.
Brent crude oil price fell 1,73% to $72.08 a barrel while U.S. West Texas Intermediate crude oil price was at $68.89 a barrel, up 1.75% by 17:30(GMT+8).
Figures this week showed U.S. crude oil inventories fell to the lowest since September 2019.
"With the restart in offshore crude production lagging, the odds are that the Ida effect will still be felt in the coming weeks," said Stephen Brennock of oil broker PVM.
Oil and equity markets also got a boost from news of a call between U.S. President Joe Biden and his Chinese counterpart Xi Jinping. The call raised hopes for warmer relations and more global trade, analysts said.
"The Biden-Xi phone call has had the same effect on oil markets as it has on other asset classes," said Jeffrey Halley, analyst at brokerage OANDA.
Brent was on track to end the week with a small gain and has rallied almost 40% this year, driven by supply cuts by the Organization of the Petroleum Exporting Countries and some demand recovery from the pandemic.
In focus next week will be revisions to the crude oil demand outlook for 2022 from OPEC and the International Energy Agency, and whether the spread of the Delta variant of COVID-19 delays a full return to 2019 demand levels.
Asian stocks gain as Biden-Xi phone call lifts sentiment
A surge in Taiwan and Singapore currencies bolstered emerging Asian forex markets on Friday, as investors viewed a phone call between U.S. President Joe Biden and China's premier Xi Jinping as a potential precursor to easing strained relations.
Nikkei 225 rose 1.25% to 30,381.84.
South Korea KOSPI rose 0.36% to 3,125.76.
S&P/ASX 200 rose 0.50% to close at 7,406.60.
Taiwan capitalization weighted stock rose 0.98% to 17,474.57.
Hang Seng Index rose 1.91% to 26,205.91.
"Markets weren't expecting Biden and Xi to actually speak until the G-20 summit later in the year," said Khoon Goh, head of Asia research at ANZ Banking Group (Singapore).
"Markets are taking this as a hopeful sign that maybe we could see toning down of recent tensions."
Sino-U.S. relations deteriorated to their lowest point in decades due to a long-drawn trade war and COVID-19-related tensions, especially during the preceding Donald Trump administration. The Biden-Xi conversation was only the second call between the leaders since Biden took office in January.
Analysts at Maybank, however, said that "spillovers to sentiments could be constrained without more discernible translation to policy changes."
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