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GLOBAL MARKETS-Gold strides further above $2,000/oz, dollar weakens

Published 08/06/2020, 03:12 AM
Updated 08/06/2020, 03:20 AM
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(Adds gold, oil settlement prices, details)
* Gold scales new record, stimulus talks stall
* U.S., European shares rise as earnings shine
* Euro gains on data, dollar dips on rising risk
* Oil moves up on big crude inventory decline
* Graphic: 2020 asset performance http://tmsnrt.rs/2yaDPgn
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh

By Herbert Lash
NEW YORK, Aug 5 (Reuters) - Gold pushed further past $2,000
an ounce on Wednesday in the face of a weak dollar and
expectations of more stimulus measures for the pandemic-ravaged
global economy, while stocks in Europe and on Wall Street
rallied on encouraging corporate earnings.
Oil prices rose to their highest since early March on a big
drop in U.S. crude inventories and on the weak dollar, which was
pushed lower by data showing euro zone business activity
returned to modest growth in July. The final Composite Purchasing Managers' Index (PMI) from
IHS Markit climbed to 54.9 from June's 48.5, better than a 54.8
flash estimate, indicating significant improvement consistent
with the continued easing of lockdowns, analysts said.
Gold set a new record after scaling $2,000 for the first
time on Tuesday, as investors seek a store of value on fears
government stimulus in response to the pandemic will trigger
inflation, devalue other assets and keep bond yields low.
Spot gold prices XAU= rose 1.1% to $2,039.59 an ounce,
after earlier reaching a record $2,055.10. U.S. gold futures
GCv1 hit a record $2,070.30 and settled up 1.4% at $2,049.30.
The dollar standard of the past 50 years is being openly
questioned because of the U.S. Federal Reserve's enormous
increase in money supply, said Ryan Giannotto, director of
research at alternative ETF provider GraniteShares.
"The dollar is collapsing under the weight of $3 trillion in
printed dollars, this all comes out in the wash with higher gold
prices," Giannotto said.
Gold has gained nearly 35% so far in 2020 and is one of the
year's best-performing assets.


Concerns that the U.S. economy is stalling amid a surge in
coronavirus cases has increased calls for more fiscal aid, a
move stock investors have welcomed.
But after more than a week of talks and few signs of
progress, top Democrats in Congress and White House officials
were said to be aiming for a deal to be passed next week.

A surprise quarterly profit from Walt Disney Co DIS.N and
a slate of upbeat results from healthcare companies lifted
sentiment on Wall Street, while European shares rose on a slate
of positive results. Disney shares jumped 8.7%.
In Europe, the broad FTSEurofirst 300 index .FTEU3 closed
up 0.3% at 1,417.05. London-listed mining groups Rio Tinto
RIO.L , BHP Group BPPB.L and Glencore GLEN.L provided the
biggest boost, lifting the broader mining index .SXPP up 4.0%
on the back of stronger metal prices. MET/L GOL/
The Dow Jones Industrial Average .DJI rose 1.2%, the S&P
500 .SPX gained 0.6% and the Nasdaq Composite .IXIC added
0.4%, on track for another record close. MSCI's benchmark for global equity markets .MIWD00000PUS
rose 0.8% to 563.53, less than 3% from its all-time peak in
February. Emerging markets stocks .MSCIEF rose 1.2%.
The dollar extended losses after U.S. private payrolls
growth slowed sharply in July, pointing to a loss of momentum in
the labor market and overall economic recovery as new COVID-19
infections spread across the United States. The ADP National Employment Report showed private payrolls
increased by 167,000, far less than an increase of 1.5 million
economists polled by Reuters had forecast. U.S. Treasury yields
rose after the report, halting their recent trend lower.
"Clearly, we have seen risk appetite rebound on global
markets and sort of a return of the theme of a U.S.
underperformance relative to world counterparts," said Karl
Schamotta, chief market strategist at Cambridge Global Payments
in Toronto.
The dollar index =USD fell 0.3%, with the euro EUR= up
0.5% to $1.1861.
The Japanese yen JPY= strengthened 0.1% versus the
greenback at 105.63 per dollar.
The U.S. government bond yield curve steepened as the
prospect of increased supply in longer-dated debt dampened
prices following the Treasury Department's announcement that it
would borrow more this quarter than previously anticipated.
The 10-year U.S. Treasury US10YT=RR note rose 2.8 basis
points to yield 0.5412%.
Oil prices rose. Brent crude futures LCOc1 settled up 74
cents at $45.17 a barrel, while U.S. crude futures CLc1 added
49 cents to end at $42.19 a barrel.



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Emerging markets http://tmsnrt.rs/2ihRugV
Coronavirus and financial markets https://tmsnrt.rs/33sUXR5
GRAPHIC-World FX rates http://tmsnrt.rs/2egbfVh
GRAPHIC-MSCI All Country World Index Market Cap http://tmsnrt.rs/2EmTD6j
GRAPHIC-Global assets in 2020 http://tmsnrt.rs/2jvdmXl
Gold versus U.S. yields and dollar https://tmsnrt.rs/31fEMns
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

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