Gold Falls on Possible Unwinding of Long Positions to Raise Cash
2342 GMT — Gold falls in the early Asian session on possible unwinding of long positions to raise cash. 'This may sound strange, but it has happened several times in periods of heightened risk aversion, as market participants have to sell gold positions to offset losses elsewhere,' Commerzbank Research's Carsten Fritsch says in a research report. However, the recent increase in Fed rate-cut expectations suggests that gold price will likely soon rise again, the commodity analyst adds, noting Fed funds futures imply 100bps worth of rate cuts by the year-end. Spot gold is down 0.3% to $2,974.24/oz. (ronnie.harui@wsj.com)
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
USA Today
7 hours ago
- USA Today
Half of the bond market is US Treasurys. Why it's 'not healthy.'
Half of the bond market is US Treasurys. Why it's 'not healthy.' Show Caption Hide Caption Trump summons Fed's Powell to tell him he's wrong on rates U.S. President Donald Trump called Federal Reserve Chair Jerome Powell to the White House on May 29 for their first face-to-face meeting since he took office in January and told the central bank chief he was making a "mistake" by not lowering interest rates. Over the past 12 months, about half of all debt in the U.S. bond market has been Treasurys – bonds and notes issued by the federal government. That's according to a June 8 research note from Torsten Sløk, the chief economist for money manager Apollo. 'This is not healthy,' Sløk wrote. 'Half of credit issued in the economy should not be going to the government.' As USA TODAY has previously reported, the growing U.S. budget deficit has caught the attention of investors in the bond market. The deficit is the consequence of revenue – taxes, mostly – not keeping up with spending. As it increases, the government issues more debt to plug the hole, and as supply rises, the government needs to pay more to attract demand from investors. President Donald Trump's proposed tax bill would exacerbate that dynamic, swelling the deficit by an estimated $2.4 trillion over the next decade, according to the nonpartisan Congressional Budget Office. More: Treasury bond yields are surging as the Trump tax bill progresses. Here's why it matters. Since all kinds of credit products, such as mortgages, are linked to the important U.S. Treasury market, those higher borrowing costs ripple through the economy. Sløk has written previously about the concerns over the power dynamic between the government and bond investors. Some analysts are concerned that investors may become what's sometimes called 'bond vigilantes' – demanding certain fiscal conditions as a condition of buying a government's debt. Overseas investors own nearly one-third of outstanding Treasury debt. Sløk's June 8 analysis is a reminder that the Treasury's mounting debt has many ripple effects. 'The consequence is that investors need to allocate more and more dollars to finance the government rather than financing growth in the economy through loans to firms and consumers,' Sløk wrote. Read next: The White House's tax bill will consider SALT (again). What could that mean for you?
Yahoo
9 hours ago
- Yahoo
Hunting for big game: Trump tariff inflation
My safari hat has been on for a month in search of big-game inflation. I blame Walmart (WMT) CFO John David Rainey for making me get into this wardrobe. "And so we'll work hard to try to keep prices low. But it's unavoidable that you're going to see some prices go up on certain items," Rainey told me in mid-May after Walmart reported first quarter earnings. Rainey — responding to my question on the impact of new Trump tariffs — said increases would be noticeable in a few short weeks. "Well, if you've got a 30% tariff on something, you're likely going to see double digits [in price increases]," Rainey warned. I've been on high alert ever since for signs of eye-popping inflation that brings back the discussion of a potential Fed rate hike this year (which has gone dormant). Or, at the bare minimum, renewed market volatility due to a more uncertain outlook. By and large, my hunting expeditions have come up short. The Consumer Price Index (CPI) for April rose by a seasonally adjusted 0.2%. The tame jump put the 12-month inflation rate at 2.3%, its lowest since February 2021. This report hit the wires on May 13, before an inflation-indicator company like Walmart warned about the looming effects of tariffs. Still, a data point is a data point. Also surprisingly docile was the inflation expectations reading in the University of Michigan's May sentiment report. Year-ahead inflation expectations were little changed at 6.6% versus April's 6.5%. The uptick marked the smallest increase since the election and ended a four-month streak of "extremely large" jumps in near-term inflation expectations. Long-term inflation expectations dropped to 4.2% in May from 4.4% in April. This was the first decline since December 2024. Again, a data point is a data point. While I hate to be the bearer of bad news, I have started to scope inflation charging out on the prairie. What I'm seeing seems to validate what Rainey told me and could set the stage for negative surprises for the bulls on inflation report days. New research from Morgan Stanley analyst Alex Straton shows that major retailers still reliant on China and other markets for production have begun to jack up prices a good bit. The average footwear year-over-year price increase tallied 13% in May, according to Straton's research. The prior six-month average was 1%. Under Armour (UA) and ON Holdings (ONON) were cited as being aggressive on recent price hikes. Some apparel pricing looked even worse, per Straton. Gap (GAP), for instance, hiked its average apparel pricing by 20% in May. Macy's (M) clocked in with a 12% apparel price increase, Levi's (LEVI) with 9%, and Nike (NKE) by 10%. Meanwhile, those aforementioned price increases at Walmart appear to be happening as Rainey promised. Customers are posting pics on the Walmart subreddit of large price increases on toys and apparel. "We also put in place some selective price actions," HP (HPQ) CEO Enrique Lores explained to me about how he is offsetting tariffs on parts that make up PCs and printers. "We think that the industry-wide price increases that we see, and especially the increased economic uncertainty, will have an impact on demand," he said, "and therefore we continue to expect that the market will grow, but we feel it will grow at a lower pace than we were expecting." Bottom line: If you've been complacent on tracking inflation, don't be. It's beginning to rear its ugly head and could devour your portfolio this summer if not careful. The Yahoo Finance team is heads down on our annual fall Invest conference. It's shaping up to be our most impactful one yet! At this invitation-only event, our guests will delve into the most critical issues powering global markets with our newsroom. Key themes include artificial intelligence, cryptocurrencies, and prosperity. Engage in Q&As following thought-provoking conversations with renowned investors, policymakers, economists, and other leading experts. For the first time, we will host two investor education rooms: one led by yours truly and one by the dynamic duo of data master Jared Blikre and veteran trader Kenny Polcari. I strongly encourage you to register now here before we are out of tickets. I will continue to remind you about Invest each Sunday in this newsletter. Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Wall Street Journal
20 hours ago
- Wall Street Journal
Treasury Yields Rise on Stable Employment Ahead of CPI
1600 ET – U.S. job creation slows less than expected, reducing odds of a dovish Fed. Bond markets react with a selloff that boosts yields. May's job creation slows less than forecast and unemployment remains at 4.2%. CME data show diminishing odds of a rate cut before September. Two or more cuts this year still represent the highest odds, but bets on only one or no cut rise. Wells Fargo foresees May's 12-month core CPI, due Wednesday, accelerating to 3.3% from April's 2.8%. The 10-year gains 0.089 percentage point this week, including 0.155 p.p. today, to 4.507%. The two-year rises 0.125 p.p. in the week and 0.115 p.p. today, to 4.039%. ( @ptrevisani) 0846 ET – U.S. job creation didn't slow as much as expected in May, spurring a bonds selloff that takes Treasury yields higher. May payrolls slowed to 139,000 from a downwardly revised 147,000. Economists surveyed by WSJ forecast 125,000. Unemployment was unchanged at 4.2%, as expected. The data likely supports expectations of a Fed hold. Yields were already rising ahead of payrolls, as markets watched the Trump-Musk break up. They rose faster after the data, particularly in longer maturities. The 10-year trades at 4.452%% and the two-year at 3.985%. ( @ptrevisani)
