RCA Wealth

10/10/2024

GOLD prices nudged higher on Thursday, while traders await a key U.S. inflation data due later in the day to gauge the Federal Reserve's future monetary policy stance.

Spot gold rose 0.2% to $2,614.00 per ounce by 0246 GMT, after easing for the previous six sessions. Prices scaled a record high last month.

U.S. gold futures gained 0.2% at $2,631.40.

The U.S. Consumer Price Index (CPI) for September is due at 1230 GMT and Producer Price Index (PPI) data on Friday.

"If core CPI comes hotter, U.S. Treasury yields will go higher and that is bad for gold. I think there is room for prices to come down, but don't necessarily see a downtrend in the big picture," said Ilya Spivak, head of global macro, Tastylive.

Markets see an 80% chance of a 25-basis-point Fed rate cut in November.

A "substantial majority" of Fed officials at the September meeting supported beginning an era of easier monetary policy with an outsized half-point rate cut, but agreed that further easing will be data-driven, according to its minutes.

If there is a big geopolitical shock triggered by the situation in the Middle East and with the Fed in an easing cycle, there is still a chance for the bullion to scale another record this year, Spivak said.

The zero-yielding bullion is preferred in a low-interest rate environment as well as amid periods of economic and geopolitical turmoil.

San Francisco Fed Bank President Mary Daly said one or two more rate cuts this year are likely if the economy evolves as she expects. Dallas Fed Bank President Lorie Logan called for gradual cuts and said that the U.S. central bank should not rush.

Meanwhile, Israel's plans to strike Iran added to concerns of rising tensions in the Middle East.

Spot silver rose 0.3% to $30.60, platinum added 1.4% to $958.60 and palladium firmed 1.3% to $1,052.61.

24/09/2024

SINGAPORE: Asian stocks rose on Tuesday to their highest in more than two and half years, boosted by a slew of Chinese stimulus measures while expectations for more U.S. rate cuts kept risk sentiment aloft and the dollar under pressure.

In an eagerly awaited press conference, China's top financial regulators unveiled a slate of measures, saying it would cut bank reserves by 50 basis points while reducing mortgage rates to try to spur sluggish economic growth.

The moves sent Chinese stocks higher, with the blue-chip CSI300 Index opening 1% higher, while the broader Shanghai Composite index was also up 1% at the open.

Hong Kong's Hang Seng Index jumped over 2% in early trading, with the mainland properties index surging 5%.

That pushed MSCI's broadest index of Asia-Pacific shares outside Japan 0.41% higher to 588.43, levels last seen in April 2022.

"While there was some anticipation that stimulus measures would be announced after they mentioned there was going to be a press briefing, the package of measures so far, I would say, is probably larger than what market was expecting," said Khoon Goh, head of Asia research at ANZ.

"Taken as a whole, this could help support the economy. Whether or not it is sufficient to address some of the underlying issues, particularly around the lack of confidence in the economy, I think still remains to be seen."

Meanwhile, investor focus will also be on the Reserve Bank of Australia's policy decision later in the day when it is widely expected to stand pat on rates although the Federal Reserve's 50 basis point cut last week has raised some expectations Australia could follow the Fed.

"The RBA is likely to stick to its hawkish stance for now, aiming to keep inflation expectations anchored," said Charu Chanana, head of currency strategy at Saxo.

"A potential pivot may come only at the Nov. 5 meeting depending on further labour market data and the Q3 CPI report."

Japan's Nikkei was the biggest mover in early trading, soaring 1.4% to a near three-week high ahead of an eagerly awaited speech by Bank of Japan Governor Kazuo Ueda.

Overnight, U.S. stocks closed modestly higher as traders continued to digest the Fed's big move, with policymakers explaining the need for the 50 bp cut.

Markets are currently evenly split on whether the U.S. central bank will go for another 50 bp cut or a 25 bp cut in November, CME Fedwatch tool showed. They are pricing in 76 bps of easing this year.

Brown Brothers Harriman Senior Markets Strategist Elias Haddad said the market is overestimating the Fed's capacity to ease. "However, it will likely take strong U.S. jobs data to trigger a material upward reassessment in Fed funds rate expectations."

The next non-farm payrolls report is due Oct. 4 and until then, Haddad said a more dovish Fed and a strong U.S. economy will support market sentiment and further undermine the dollar against growth-sensitive currencies.

The dollar index, which measures the U.S. currency against six rivals, was at 100.95, not far from the one-year low of 100.21 touched last week. The yen was little changed at 143.65 per dollar.

The euro was steady at $1.11055 in early Asia, having dropped about 0.5% on Monday as business activity reports for the euro zone economy disappointed, raising expectations for more interest rate cuts by the European Central Bank this year.

The Australian dollar was 0.15% lower at $0.6828 but hovering close to the nine-month high it touched on Monday.

In commodities, oil prices were slightly higher in early trading, with Brent crude futures up 0.26% at $74.09 a barrel, while U.S. crude futures climbed 0.3% to $70.6. Oil prices slid on Monday on demand worries as well as weak economic data from Europe.

16/09/2024