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Gold at Near 7-month Peak as Dollar, Yields Dip on Fed Rate-cut Bets

FILE PHOTO: Gold bars are pictured at the plant of gold and silver refiner and bar manufacturer Argor-Heraeus in Mendrisio, Switzerland, July 13, 2022. REUTERS/Denis Balibouse//File Photo
FILE PHOTO: Gold bars are pictured at the plant of gold and silver refiner and bar manufacturer Argor-Heraeus in Mendrisio, Switzerland, July 13, 2022. REUTERS/Denis Balibouse//File Photo
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Gold at Near 7-month Peak as Dollar, Yields Dip on Fed Rate-cut Bets

FILE PHOTO: Gold bars are pictured at the plant of gold and silver refiner and bar manufacturer Argor-Heraeus in Mendrisio, Switzerland, July 13, 2022. REUTERS/Denis Balibouse//File Photo
FILE PHOTO: Gold bars are pictured at the plant of gold and silver refiner and bar manufacturer Argor-Heraeus in Mendrisio, Switzerland, July 13, 2022. REUTERS/Denis Balibouse//File Photo

Gold prices touched nearly a seven-month high on Wednesday, propelled by a decline in the US dollar and bond yields as investors grew confident that the Federal Reserve would likely cut interest rates by the first half of next year.
Spot gold rose 0.1% to $2,042.66 per ounce by 0817 GMT, after hitting its highest since May 5. US gold futures for December delivery rose 0.2% to $2,043.60 per ounce.
"Gold is driven by an increasing market expectation of a Fed pivot from a hawkish tilt to a dovish tilt in the first half of next year - earlier than it did before," said Kelvin Wong, senior market analyst for Asia Pacific at OANDA.
"The key point to look for is the PCE (personal consumption expenditures) data and markets are expecting another slowdown in US inflationary pressure."
Fed Governor Christopher Waller on Tuesday flagged a possible rate cut in the months ahead, said Reuters.
Traders are now pricing in a more than 70% chance of rates easing in May, compared with a 50% chance on Tuesday, CME's FedWatch Tool shows.
Lower rates reduce the opportunity cost of holding non-interest-bearing bullion.
Investors' attention is now on the revised US third-quarter GDP figures due at 1330 GMT and key PCE data - the Fed's preferred inflation gauge - on Thursday.
Making gold less expensive for other currency holders, the dollar index hit a more than three-month low against its rivals and was poised to mark its worst monthly performance in a year. Yields on 10-year Treasury notes fell to an over two-month low of 4.2802%.
Spot gold may extend gains into a range of $2,059-$2,069 per ounce, Reuters technical analyst Wang Tao said.
Spot silver fell 0.1% to $24.99 per ounce and platinum slipped 0.4% to $936.17. Palladium dropped 1% to $1,044.96 per ounce.

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China Mulls Draft Law to Promote Private Sector Development

A Chinese national flag flutters on a financial street in Beijing. (Reuters)
A Chinese national flag flutters on a financial street in Beijing. (Reuters)
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China Mulls Draft Law to Promote Private Sector Development

A Chinese national flag flutters on a financial street in Beijing. (Reuters)
A Chinese national flag flutters on a financial street in Beijing. (Reuters)

Chinese lawmakers are deliberating a draft of the country's first basic law specifically focused on the development of the private sector, the country’s Xinhua news agency reported.

“The law will be conducive to creating a law-based environment that is favorable to the growth of all economic sectors, including the private sector,” said Justice Minister He Rong, while explaining the draft on Saturday during the ongoing session of the Standing Committee of the National People's Congress, the national legislature.

The draft private sector promotion law covers areas such as fair competition, investment and financing environments, scientific and technological innovation, regulatory guidance, service support, rights and interests protection and legal liabilities.

The draft has incorporated suggestions solicited from representatives of the private sector, experts, scholars and the general public, the minister said.

China left its benchmark lending rates unchanged as expected at the monthly fixing on Friday.

Persistent deflationary pressure and tepid credit demand call for more stimulus to aid the broad economy, but narrowing interest margin on the back of fast falling yields and a weakening yuan limit the scope for immediate monetary easing.

The one-year loan prime rate (LPR) was kept at 3.10%, while the five-year LPR was unchanged at 3.60%.

In a Reuters poll of 27 market participants conducted this week, all respondents expected both rates to stay unchanged.

Morgan Stanley said in a note that the 2025 budget deficit and mix are more positive than expected and suggest Beijing is willing to set a high growth target and record fiscal budget to boost market confidence, but further policy details are unlikely before March.

Last Friday, data released by the country's central bank said total assets of China's financial institutions had risen to 489.15 trillion yuan (about $68.03 trillion) by the end of third quarter this year.

The figure represented a year-on-year increase of 8%, said the People's Bank of China.

Of the total, the assets of the banking sector reached 439.52 trillion yuan, up 7.3% year on year, while the assets of securities institutions rose 8.7% year on year to 14.64 trillion yuan.

The insurance sector's assets jumped 18.3% year on year to 35 trillion yuan, the data showed.

The liabilities of the financial institutions totaled 446.51 trillion yuan, up 8% year on year, according to the central bank.

Separately, data released by the National Energy Administration on Thursday showed that China's electricity consumption, a key barometer of economic activity, rose by 7.1% year on year in the first 11months of the year.

During the period, power consumption of the country's primary industries increased by 6.8% year on year, while that of its secondary and tertiary sectors rose by 5.3% and 10.4%, respectively.

Residential power usage saw strong growth of 11.6% during this period, the administration said.

In November alone, power usage climbed 2.8% from one year earlier, according to the data.