Mumbai: Gold prices were little changed on Monday as the market waited for a flurry of key U.S. economic data this week, with a weaker dollar offering some support.
FUNDAMENTALS
* Spot gold was nearly flat at $1,256.06 per ounce at 0050 GMT, staying near a one-week high hit on Friday.
* U.S. gold futures for August delivery rose 0.04 percent to $1,256.80 per ounce.
* The dollar sagged against its major peers on Monday, losing traction as U.S. Treasury yields stayed low amid fading expectations that the Federal Reserve will hike interest rates again later this year.
* Major central banks should press ahead with interest rate increases, the Bank for International Settlements said on Sunday, while recognizing that some turbulence in financial markets will have to be negotiated along the way.
* Britain’s Brexit Minister David Davis said on Sunday he was “pretty sure” he could negotiate a good deal to leave the European Union, something that would require a transitional arrangement for around one or two years.
* China’s top banking regulator has told banks to reform by tackling China’s “zombie firms”, control regional housing market bubbles and push forward with debt to equity swaps, according to a statement posted on the regulator’s website late Friday.
* Asia bond demand is running at its highest level in eight months and looks set to stay firm this year, boosted by the region’s higher returns at a time when stubbornly low inflation in the United States is keeping a lid on Treasury yields.
* U.S. data due this week include the June consumer confidence indicator, pending home sales, crude oil inventories, revised first-quarter GDP and the PCE price index.
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Yuan set to weaken for 8th day despite firmer fix
CHINA-YUAN/MIDDAY
SHANGHAI, June 26 (Reuters) – China’s yuan is set to weaken for the eighth consecutive session against the U.S. dollar on Monday despite a firmer midpoint set by China’s central bank.
A surge in the yuan’s value at the end of May had been largely engineered by the authorities, but traders have shifted their focus to economic fundamentals and doubt about how long the central bank will keep money rates high.
The People’s Bank of China set the midpoint rate at 6.822 per dollar prior to market open, firmer than the previous fix 6.8238.
The spot market opened at 6.8340 per dollar and was changing hands at 6.8407 at midday, 27 pips weaker than the previous late session close.
United Overseas Bank Limited Co (UOB) saw improving upward momentum for the U.S. dollar, predicting that if the yuan stays persistently below the 6.8370 level against the greenback, the Chinese currency could decline further to 6.8550.
In the longer term, some economists see the West and the East heading in different directions, marking the big monetary policy divergence,Indian Gold Price Live and potentially affect capital flows, and thus, currency values.
“Central banks in developed economies are leaning towards tightening. In emerging Asia, by contrast, the bias remains for easing,” Frederic Neumann, HSBC’s Co-head of Asia Economic Research, wrote in a note on Monday.
In China, although regulatory tightening has squeezed rates higher of late, “still, it remains to be seen how long that will last: with growth bound to decelerate again, and inflation still nailed to the floor, there are limits to the PBoC’s ability to press the brakes.”
The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 93.88, weaker than the previous day’s 94.1.
The global dollar index rose to 97.273 from the previous close of 97.264.
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