Gold Gets Boost From Weaker Dollar — Market Talk

1117 ET - A weaker U.S. dollar is giving gold futures support. The dollar movement appears to be a reflection of recent softer-than-expected macroeconomic reports. "We have had a couple of soft inflation reports along with weaker employment and retail sales data and this has led to more dovish expectations of the Fed with important asset price impacts," says Stephen Coltman of 21shares in a note. As part of the movement gold is now "showing signs of life," says Coltman. Most-active gold futures are up 0.9% to $4,474.50 a troy ounce. ([email protected])1113 ET - Gulf tourism is showing early signs of recovery, particularly in travel within the region, although the rebound remains uneven. The UAE is likely to struggle for longer because of its greater reliance on visitors from outside the Gulf, says Nicolas Crittenden at Capital Economics. Hotel occupancy rates in Dubai were down more than 30 percentage points in June from a year earlier, while room rates have been discounted as demand weakened. By contrast, intra-GCC travel is showing signs of recovery, benefiting Bahrain in particular. Saudi Arabia's tourism sector should prove more resilient because a significant share of demand is tied to religious travel, which is geographically removed from the conflict, Crittenden says. ([email protected])1109 ET - The eurozone's 0.4% rise in second-quarter GDP shows the economy has proved more resilient than the last energy-price surge in 2022, Capital Economics' Neil Shearing says in a note. The terms-of-trade shock has been smaller than feared as the jump in global energy prices has been more modest, particularly for natural gas. Europe has also reduced dependence on fossil fuels, as imports of oil have fallen by about 10% and natural gas by around 15% compared with 2022, Shearing says. Fiscal policy is also more supportive, and households have reduced savings. Manufacturers appear to have brought forward production in the second quarter to get ahead of perceived increases in energy costs further ahead, he says. ([email protected])1059 ET - Bitcoin can't seem to sustain an elongated breakout from either the higher and lower side of its trading range in recent weeks. The cryptocurrency is up 0.8% to $63,573, but there are factors working against further upside, including the resumption of outflows from bitcoin ETFs by funds. "After a relatively positive start to August, U.S. spot bitcoin ETFs recorded approximately $390 million in net outflows during the week of August 10-14," says Linh Tran of XS.com in a note. "This is not enough to conclude that institutional investors are abandoning bitcoin, but it does suggest that ETF demand is no longer providing the same level of support as before." ([email protected])1036 ET - U.K. investors await a batch of key data releases this week, which include jobs, inflation, public sector finances, retail sales, and flash purchasing managers' survey data. After last week's better-than-expected U.K. quarterly GDP data, this week's figures have more significance for investors, Tickmill Group's Patrick Munnelly says in a note. "If the data show resilience alongside sticky wages and higher headline inflation, the Bank of England's patient stance becomes harder to defend," he says. However, if wage growth decelerates and PMI data show "modest momentum," the BOE could stay on hold for the remainder of 2026, Munnelly says. ([email protected])1026 ET - U.S. and Canadian officials are in talks to either delay or scrap Trump administration plans to impose 50% tariffs on certain Canadian imports. The result of those talks will influence price growth and affect near-term inflation data, says Canadian research firm Signal49. The new 50% duty is set to kick in on Wednesday, failing a deal. Should no pact emerge, "consumer prices in Canada could be pulled in many directions," Signal49 says, citing the possibility of retaliatory tariffs from Ottawa. Signal49 says weaker domestic demand, stemming from job losses, could pull prices down, while a weaker C$ could elevate the cost of Canada's imports. ([email protected]; @paulvieira)1023 ET - An acceleration in Canada inflation in July won't move the needle much for the Bank of Canada, says Tiago Figueiredo, economist at Desjardins Securities. A return to 3% total inflation was driven by war-fueled energy prices and one-off factors related to World Cup travel costs, he says, adding that stripped-down measures of core CPI looked contained. "There is still limited evidence that higher energy prices are spilling over to other goods and services," Figueiredo says. Trade talks between Ottawa and Washington to avert a new 50% tariff on certain Canadian goods "remain the primary risk" to the economic outlook, he adds, reinforcing Desjardins' call for the BOC policy rate to remain steady through 2026. ([email protected]; @paulvieira)1018 ET - Investors in euro-denominated bank bonds say they don't intend to increase allocations in high-risk credit segments in the second half of 2026, ABN Amro's bank debt survey shows. European fund managers expect increased fund inflows in the second half, but they don't intend to add credit duration or credit risk to their portfolios, ABN Amro strategists say in a note. This suggests "that the low spread levels are starting to make investors a bit more cautious," the strategists say. ([email protected])1016 ET - Canada's July CPI report might shift the Bank of Canada's balance of risks toward a hawkish tilt, given that headline inflation is back at 3%, or the top end of the central bank's inflation-targeting range, says Jay Zhao-Murray, chief economist at research firm Sibley Creek. "Interest rates could rise in the coming months if inflation persists above 3%," Zhao-Murray says, "but for now, the central bank can dismiss it as a temporary pick-up." BOC sets rate policy to achieve and maintain 2% inflation. He adds breadth was moderate, as five of the eight components tracked by Statistics Canada accelerated in July. ([email protected]; @paulvieira)1013 ET - With stock-market valuations sky-high as investors make big bets on artificial-intelligence technology, a market correction looks probable, European Central Bank economists say in a blogpost. The rally in the tech sector has brought valuations to levels last seen during the dot-com bubble, they say. "Economic research on past technological revolutions points to a worrisome conclusion: a correction of current stock-market valuations is likely." Unlike during the dot-com bubble, there is less room this time to cut interest rates or use fiscal policy to cushion the fallout, they say. A correction would have severe consequences for the eurozone through investors' direct exposure to the U.S.'s Magnificent Seven tech stocks, and the "overexuberance" in European stock markets themselves, the economists add. ([email protected])0957 ET - Canadian consumer price inflation heated up last month to 3% annually, though increases were mainly concentrated and core inflation remains subdued, KPMG Canada's Daniel Hyun says. Gasoline prices rose more sharply in July and higher jet fuel costs pushed up prices for air transportation, while travel tours were more expensive likely thanks to the soccer World Cup. Hyun notes the share of the CPI basket running above the Bank of Canada's 2% target on an annual basis has actually fallen since the start of the year, dipping again in July to 51% from 52%. The economist maintains the view the central bank will remain on hold for the foreseeable future as inflationary pressures remain narrow, trade uncertainty looms and slack in the economy is still being absorbed. ([email protected]; @RobbMStewart)0951 ET - The Norwegian krone has scope to rise further due the prospect of oil prices remaining elevated and the possibility of the Norges Bank raising rates again, Rabobank's Jane Foley says in a note. Speculation that the Iran war could drag on could keep oil prices high, supporting the krone given Norway's position as a major energy exporter, she says. Inflation remains above the Norges Bank's target and the central bank has raised concerns about price pressures becoming embedded in higher inflation expectations. "Consequently, another rate hike this cycle remains a risk," she says. The euro falls 0.1% to 10.9127 krone after reaching a three-week low of 10.8920 earlier, according to LSEG. Rabobank lowers its three-month target to 10.80 from 10.90 previously.([email protected])