【Market Evening】 Oil rises to one-week high, Gold steady as dollar firms
Dollar finds footing as traders await inflation data; Gold steady as dollar firms, investors brace for inflation data; Oil rises to one-week high as U.S. supply concerns dominate.

Gold steady as dollar firms
Gold prices were steady on Monday as the dollar firmed, while investors were cautious ahead of U.S. consumer price readings that could be crucial to Federal Reserve’s decision on when to start withdrawing its asset purchases.
Spot gold price rose 0.09% to $1789.79 per ounce and spot silver fell 0.31% to $23.71 per ounce by 17:30(GMT+8).
“There’s the belief that if inflation does run away, the Fed will have to stamp on it and that means faster tapering and interest rate hikes sooner than expected. That won’t be good for gold,” IG Market analyst Kyle Rodda said.
Gold is in a range between $1,760 and $1,830 and that reflects a general indecision at the moment about virus, growth, inflation expectations and policy, Rodda added.
Data on Friday showed U.S. producer prices increased solidly in August. The reading sent the benchmark U.S. 10-year Treasury yield higher and left gold down 2.1% for the week.
Higher yields translate into higher opportunity cost for holding non-interest bearing bullion.
The US dollar index hit an over two-week high, weighing on gold’s allure for those holding other currencies.
“Gold’s price action continues to be seriously underwhelming, unable to rally when the U.S. dollar falls and moving lower when it rises,” Jeffrey Halley, a senior market analyst for Asia Pacific at OANDA, said in a note.
Gold needed to recapture and hold above $1,800 this week, preferably $1,830, to soothe the nerves of nervous long-positions, he added.
All eyes are now on consumer price index for August, due to be released on Tuesday, which is likely to show core inflation easing slightly to 4.2%.
Cleveland Fed President Loretta Mester said on Friday she would still like the central bank to begin tapering asset purchases this year, joining the chorus of policymakers with similar view.
Dollar finds footing
The dollar began a week full of big economic data on a firm footing, with investors wary of the Federal Reserve beginning its exit from super-supportive policy even as cases of the coronavirus surge.
The greenback closed out its best week in three weeks on Friday, gaining about 0.6% on the euro as it benefited both from safety flows and the policy outlook lifting yields on U.S. Treasuries.
It maintained gains early in the Asia session to hold the common currency at $1.1810. It was also steady at 109.91 Japanese yen, while its strength has for now stymied rallies in the Australian and New Zealand dollars.
In morning trade, the Aussie was marginally firmer at $0.7362, but it has struggled to stay above $0.74.
“A couple of dynamics favor the dollar,” said Rodrigo Catril, senior currency strategist at National Australia Bank in Sydney, particularly risk aversion as even vaccinated countries such as Singapore and Britain log surges in Covid-19 cases.
“Re-opening still faces challenges from the consumer, who is cautious and from bottlenecks which restrict ability for the economy to rebound with some gusto,” he said.
“At the same time rising infections suggest we may still need to reintroduce restrictions of some sort. The other thing is that the Fed continues to signal that tapering is coming.”
Oil rises to one-week high
Oil rose on Monday, supported by concerns over shut output in the United States, the world's biggest producer, following damage from Hurricane Ida, while analysts expected a stable market in coming months.
Brent crude oil price rose 1.42% to $73.46 a barrel while U.S. West Texas Intermediate crude oil price was at $70.36 a barrel, up 1.43% by 17:30(GMT+8).
Brent has been rangebound between $70 and $74 per barrel in the last three weeks.
"Crude oil prices may not have much room to rise in the near term, but at the same time are not expected to crash soon," said Stephen Brennock of broker PVM.
U.S. Energy Information Administration (EIA) said last week in a report that it expected Brent prices to remain near current levels for the remainder of 2021, averaging $71 per barrel during the fourth quarter of 2021.
"Markets still need clarity on the virus impacts beyond the very near term and until we get that, it seems like most assets, including oil, may continue to drift sideways," Howie Lee, an economist at Singapore's OCBC bank.
The prices still found some support from the impact of Hurricane Ida on the U.S. output. About three-quarters of the offshore crude oil production in the Gulf of Mexico, or about 1.4 million barrels per day, has remained halted since late August.
"Hurricane Ida was unique in having a net bullish impact on U.S. and global oil balances - with the impact on demand smaller than on production," Goldman Sachs analysts said in a note dated Sept. 9.
However, the number of rigs in operation in the United States grew in the latest week, energy service provider Baker Hughes said, indicating production may rise in coming weeks.
Beyond the impact of Ida, market attention will focus this week on potential revisions to the oil demand outlook from the Organization of the Petroleum Operating Countries (OPEC) and the International Energy Agency (IEA) as coronavirus cases continued to rise. OPEC will likely revise its 2022 forecast lower on Monday, two people familiar with the matter said.
Supply risks remain from China's planned release of oil from strategic reserves while the hope of fresh talks on a wider nuclear deal between Iran and the West was raised after the U.N. atomic watchdog reached an agreement with Iran on Sunday about the overdue servicing of monitoring equipment to keep it running.
China said on Monday it will announce details of planned crude oil sales from strategic reserves in due course.
Asian markets mostly lower
Shares slipped Monday in most Asian markets after Wall Street benchmarks ended last week with a decline.
Nikkei 225 rose 0.22% to 30,447.37.
South Korea KOSPI rose 0.07% to 3,127.86.
S&P/ASX 200 rose 0.25% to close at 7,425.20.
Taiwan capitalization weighted stock fell 0.16% to 17,446.31.
Hang Seng Index fell 1.50% to 25,813.81.
Japan reported its wholesale prices were near a 13-year high in August, adding to concerns over inflation as the country prepares for a leadership transition.
Prices have surged in the world’s three largest economies, and elsewhere, as supply chain troubles, shipping bottlenecks and other disruptions arising from the pandemic hinder a return to normal growth.
“Cautious sentiments largely follow through with the downside move for U.S. markets last week, amid growth concerns along with rising inflationary pressures,” Jun Rong Yeap of IG said in a commentary.
Price pressures add to the likelihood that the Federal Reserve and other central banks might move sooner to nudge interest rates up from the ultra-low levels they have been kept at to help fend off the worst impacts of the pandemic.
Stocks have traded in a narrow range for several weeks as many investors stick to the sidelines waiting to get a fuller understanding of where the economy is headed and how the pandemic is impacting businesses.
Bonus rebate to help investors grow in the trading world!