【Market Evening】'Shaky' gold holds tight range, Dollar steady, Oil gains
Sterling slips ahead of Bank of England meeting; AstraZeneca vaccine to be used from October only on request; 'Shaky' gold holds tight range after mixed Fed signals.Oil gains as draw in U.S. crude stocks reinforces outlook for robust demand.

Gold holds tight range
Gold steadied in a tight range on Thursday, tracking moves in the dollar as mixed signals from U.S. Federal Reserve officials on stimulus withdrawal kept investors on their toes.
Spot gold rose 0.13% to $1781.17 per ounce, silver rose .13%to $25.990 per ounce by 18:00 (GMT+8).
Gold is still on “shaky” ground, and is “likely to swing between losses and gains as investors navigate conflicting signals from Fed officials,” said senior analyst at FXTM Lukman Otunga.
Investors are likely to adopt a cautious approach towards gold as they await U.S. inflation data on Friday, Otunga added.
Two Fed officials said on Wednesday a period of high inflation may last longer than anticipated, with Atlanta Fed President Raphael Bostic expecting a rate hike in late 2022.
The remarks helped the dollar index steady, after weakness earlier this week due to Fed Chairman Jerome Powell’s reassurance that interest rates would not be hiked too quickly.
Gold started to recover on bargain hunting, but “the technical construction means there’s resistance from about $1,805 up to $1,830s. So that’s going to make some people a little bit nervous,” StoneX analyst Rhona O’Connell said. “But for the longer term ... we’ve got negative real interest rates, and that’s positive for gold.”
Gold, considered a hedge against inflation, also benefits from lower interest rates as they reduce the opportunity cost of holding non-yielding bullion. The Fed’s hawkish tone last week drove a 6% fall in bullion.
Focus is also on weekly U.S. labour data - key for Fed policy.
“If jobless claims improve, this could add to the growing list of factors that may bring more hawks to the policy discussion table,” pressuring zero-yielding gold, FXTM’s Otunga said.
Dollar steady
The dollar slipped slightly in early European trade on Thursday, having spent the week gradually edging away from two-month highs hit after the U.S. Federal Reserve’s surprise hawkish shift at its meeting last week.
The US dollar index fell 0.08% to 91.73 by 18:00(GMT+8).
Currency markets were quiet as traders weighed up different signals from Federal Reserve officials on the timing of a withdrawal of monetary stimulus.
The euro was a touch higher against the dollar, up 0.1% on the day at $1.1939.
The dollar got some support overnight from two Fed officials saying that a period of higher inflation in the United States could last longer than expected.
But on Tuesday, Fed Chair Jerome Powell had said that price pressures should ease on their own.
Six Fed officials are due to speak on Thursday, including New York Fed President John Williams, who on Tuesday said any conversation about when to adjust interest rates is still far off.
Market attention is focused on the Bank of England meeting and policy announcement. No policy changes are expected but investors will be looking for any hints that the BoE will follow in the Fed’s footsteps as inflation pressures mount.
Andy Haldane is likely to vote again to scale back the bond-buying programme at his final meeting before leaving the BoE and market players will be keen to see if any other policymakers join him in doing so.
Sterling was a touch lower in early London trading, down 0.1% at $1.3962 and 85.495 pence per euro.
“I am not sure whether the BoE will send the signal the Sterling bulls are hoping for,” wrote Commerzbank strategist Thu Lan Nguyen in a note to clients.
“I fear that it might be too early and that the recent rise in inflation wasn’t high enough yet. As a result, I see considerable potential for disappointment for Sterling today.”
The Australian dollar, which is seen as a liquid proxy for currency market risk appetite, was flat on the day at $0.75745, having gained 1.3% so far this week.
The U.S. dollar was down 0.1% against the yen, after the pair hit a 15-month high of 111.11 overnight.
Oil gains
Oil prices gained for a second day on Thursday after a bigger-than-expected drawdown in U.S. crude and gasoline stocks confirmed outlook for robust fuel demand and on doubts about the future of the 2015 Iran nuclear deal that could end U.S. sanctions on Iranian crude exports.
U.S. West Texas Intermediate (WTI) crude was at $72.953 a barrel, fell 0.13%%, Brent was at $74.651 a barrel, fell 0.06% by 18:00(GMT+8).
U.S. crude inventories fell by 7.6 million barrels in the week to June 18 to 459.1 million barrels, their lowest since March 2020, the U.S. Energy Information Administration said. The drawdown was nearly double analysts’ expectations in a Reuters poll for a 3.9 million-barrel drop.
“The data was encouraging since not only crude stocks, but also gasoline inventory dropped, suggesting healthy demand and tight supply,” said Tetsu Emori, CEO of Emori Fund Management Inc.
“Unless OPEC+ decides next week to increase output more than expected for August and later, oil prices are expected to stay at the current high range for a while,” he said.
The Organization of the Petroleum Exporting Countries and its allies (OPEC+), which meet on July 1, have been discussing a further unwinding of last year’s record output cuts from August but no decision has been made, two OPEC+ sources said on Tuesday.
Brent has gained more than 45% this year on the back of supply cuts led by the OPEC+ and recovering demand amid easing COVID-19 restrictions, with some industry executives talking of crude returning to $100 for the first time since 2014.
“Behind the Thursday’s rally is also a view that there are still gaps in the talks over the 2015 Iran nuclear deal,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.
Iran said on Wednesday the United States had agreed to remove all sanctions on Iran’s oil and shipping but Washington said “nothing is agreed until everything is agreed” in talks to revive the 2015 Iran nuclear deal.
“We may see a short-term correction ahead of the OPEC+ meeting, but the market trend will remain bullish due to tightening supply-demand balance,” Kikukawa said.
Asian stock mixed
Asian-Pacific stock were mixed on Thursday.
Nikkei 225 rose 0.34 points or0.0012%, close at 28,875.23.
S&P/ASX 200 fell 23.20 points or 0.32% to close at 7,275.30.
Hang Seng Index rose 65.39 points or 0.23% to 28,882.46.
South Korea's Kospi rose 9.91 points or 0.30% to 3,286.10.
Taiwan capitalization weighted stock index rose 71.25 points or 0.41% to 17,407.96.
European stock opened higher on Thursday, At press time:
FTSE 100 Index rose 22.31 points or 0.32% at 7,096.37.
Germany DAX 30 rose 128.23 points or 0.83% at 15,584.62.
France CAC 40 rose 61.77 points or 0.94 at 6,612.84.
Australia will not need the AstraZeneca vaccine from October except by request, as most Australians over the age of 60 are expected to be vaccinated by then.
From October to December, 27.6 million doses of Pfizer will be delivered to help immunise the population against the coronavirus, with Commonwealth modelling showing the AstraZeneca vaccine is unlikely to be needed in the last quarter of the year.
The national vaccine rollout plan released on Wednesday afternoon reveals the locally made AstraZeneca vaccine will be phased out of use in Australia except by request after health authorities changed advice to limit its use to people older than 60 due to concerns about a rare blood clotting disorder.
Focus Tonight
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