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Gold Subdued as US Dollar, Yields Firm; Traders Await Inflation Data

A view shows ingots of 99.99 percent pure gold in a workroom during production at Krastsvetmet precious metals plant in the Siberian city of Krasnoyarsk, Russia, May 23, 2024. REUTERS/Alexander Manzyuk
A view shows ingots of 99.99 percent pure gold in a workroom during production at Krastsvetmet precious metals plant in the Siberian city of Krasnoyarsk, Russia, May 23, 2024. REUTERS/Alexander Manzyuk
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Gold Subdued as US Dollar, Yields Firm; Traders Await Inflation Data

A view shows ingots of 99.99 percent pure gold in a workroom during production at Krastsvetmet precious metals plant in the Siberian city of Krasnoyarsk, Russia, May 23, 2024. REUTERS/Alexander Manzyuk
A view shows ingots of 99.99 percent pure gold in a workroom during production at Krastsvetmet precious metals plant in the Siberian city of Krasnoyarsk, Russia, May 23, 2024. REUTERS/Alexander Manzyuk

Gold prices edged lower on Wednesday as the US dollar and Treasury yields held firm ahead of key inflation data, which could offer more clarity on the Federal Reserve's interest rate trajectory.
Spot gold eased 0.2% to $2,354.76 per ounce by 0711 GMT. Prices had hit an all-time high of $2,449.89 on May 20, said Reuters.
US gold futures fell 0.1% to $2,355.10.
The dollar held steady against its rivals, making gold less attractive for other currency holders, while benchmark US 10-year bond yields rose to multi-week peaks.
"Investors will try to book profit and prices are trading near $2,350. So, prices have not corrected but it's a kind of a healthy consolidation after a very sharp rally last Monday," said ANZ commodity strategist Soni Kumari.
"Investors will try to position themselves in gold because overall long-term fundamentals are looking pretty strong for gold at the moment."
The US core personal consumption expenditures (PCE) data, the Fed's preferred measure for inflation, is due on Friday.
"A softer US core PCE release would make the job easier for gold to reclaim the $2,400 level, given the possible rate-cut timing implications," said Tim Waterer, chief market analyst at KCM Trade in a note.
Traders currently pricing in about a 59% chance of a rate cut by November, according to the CME FedWatch Tool.
While gold is used as a hedge against inflation, rate hikes raise the opportunity cost of holding non-yielding bullion.
Spot silver rose 0.3% to $32.19, platinum was down 0.4% to $1,058.95 and palladium was unchanged at $973.02.
Meanwhile, BHP Group said it needed more time to engage with Anglo American, a week after the London-listed miner rejected BHP's 38.6 billion pounds ($49.20 billion) offer ahead of a final bid deadline later in the day.
The International Monetary Fund upgraded China's GDP growth forecasts for 2024 and 2025 after a "strong" first quarter. China is a key consumer of bullion and other industrial metals.

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China’s October New Lending Tumbles More than Expected despite Policy Support

A masked woman walks at a fashion boutique displaying posters to promote Singles' Day discounts at a shopping mall in Beijing, Monday, Nov. 11, 2024. (AP)
A masked woman walks at a fashion boutique displaying posters to promote Singles' Day discounts at a shopping mall in Beijing, Monday, Nov. 11, 2024. (AP)
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China’s October New Lending Tumbles More than Expected despite Policy Support

A masked woman walks at a fashion boutique displaying posters to promote Singles' Day discounts at a shopping mall in Beijing, Monday, Nov. 11, 2024. (AP)
A masked woman walks at a fashion boutique displaying posters to promote Singles' Day discounts at a shopping mall in Beijing, Monday, Nov. 11, 2024. (AP)

New bank lending in China tumbled more than expected to a three-month low in October, as a ramp-up of policy stimulus to buttress a wavering economy failed to boost credit demand.

Chinese banks extended 500 billion yuan ($69.51 billion) in new yuan loans in October, down sharply from September and falling short of analysts' expectations, according to data released by the People's Bank of China (PBOC).

Economists polled by Reuters had predicted a fall in new yuan loans to 700 billion yuan last month from 1.59 trillion yuan the previous month and against 738.4 billion yuan a year earlier.

"Corporate financing demand remains weak due to poor profitability," said Luo Yunfeng, an economist at Huaxin Securities. "Credit demand may not pick up soon despite recent central bank policy measures."

The PBOC does not provide monthly breakdowns but Reuters calculated the October figures based on the bank's Jan-October data released on Monday, compared with the Jan-September figure.

The PBOC said new yuan loans totaled 16.52 trillion yuan for the first ten months of the year.

Household loans, including mortgages, dropped to 160 billion yuan in October from 500 billion yuan in September, while corporate loans dipped to 130 billion yuan from 1.49 trillion yuan, according to Reuters calculations based on central bank data.

Chinese policymakers have been working to arrest further weakness in an economy stuttering in recent months from a prolonged property market downturn and swelling local government debt.

Among their goals is to tackle the side-effects from a mountain of debt left from previous stimulus dating back to the 2008-2009 global financial crisis.

China's central bank governor Pan Gongsheng said China will step up counter-cyclical adjustment and affirm a supportive monetary policy stance, a central bank statement showed on Monday, citing a report Pan delivered to the top legislative body last week.

In late September, the central bank unveiled an aggressive stimulus package including rate cuts, and Chinese leaders pledged "necessary fiscal spending" to bring the economy back on track to meet a growth target of about 5%.

MORE STEPS ON THE CARDS

China unveiled a 10 trillion yuan debt package on Friday to ease local government financing strains and stabilize flagging economic growth, as it faces fresh pressure from the re-election of Donald Trump as US president.

New measures planned will include sovereign bonds issuance to replenish the coffers of big state banks, and policies to support purchase of idle land and unsold flats from developers, Finance Minister Lan Foan said.

Analysts at OCBC Bank expect the central bank to deliver another cut in banks' reserve requirement ratio in November or December to support the planned bond issuance.

China watchers are skeptical the steps will produce a near-term boost in economic activity as most of the fresh funds will be used to reduce local government debt, but China's central bank said it will continue supportive monetary policy to create a favorable monetary and financial environment for economic growth.

The PBOC also said it will study and revise money supply statistics to better reflect the real situation of the country's money supply.

Trump's election win could also prompt a stronger fiscal package in expectations of more economic headwinds for China. Trump threatened tariffs in excess of 60% on US imports of Chinese goods, rattling China's industrial complex.

Broad M2 money supply grew 7.5% from a year earlier, central bank data showed, above analysts' forecast of 6.9% in the Reuters poll. M2 grew 6.8% in September from a year ago.

Outstanding yuan loans grew 8.0% in October from a year earlier. Analysts had expected 8.1% growth, the same pace as in September.

The outstanding total social financing (TSF), a broad measure of credit and liquidity in the economy, slowed to a record low of 7.8% in October, from 8.0% in September. Acceleration in government bond issuance could help boost growth in TSF.

TSF includes off-balance sheet forms of financing that exist outside the conventional bank lending system, such as initial public offerings, loans from trust companies, and bond sales.

In October, TSF fell to 1.4 trillion yuan from 3.76 trillion yuan in September. Analysts polled by Reuters had expected TSF of 1.55 trillion yuan.