GOLD: Holding Lower After Wednesday's Dip, Safe Haven Flows Weighed By Equities
Gold prices are holding slightly weaker in the first part of Thursday trade. We were last near $3383.5/oz. This is off recent highs near $3439/oz. We have seen a generally positive tone to regional equity markets so far today, with Japan continuing to outperform. US equity futures are also a touch higher, led by Nasdaq futures. As we saw on Wednesday, the global equity bounce is reducing safe haven flows, which may be weighing on bullion demand. So far today, the generally softer tone for the USD is not providing positive impetus to gold prices, with reduced safe haven flows outweighing at this stage.
- Bullion is again below the 23 June high of $3395.1. It fell to a low of $3381.59 on Wednesday. Initial support is at $3350.8, 20-day EMA. Resistance is $3483.9 with the bull trigger at $3500.1.
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CHINA: Bond Futures Lower as Equity Rallies
- A decent bounce in risk sentiment sees major bourses strong and bond futures lower.
- The 10YR is lower by -0.06 at 109.08 and remains above the 20-day EMA of 108.99
- The 2YR is lower by -0.01 at 102.51 and sits just above the 50-day EMA of 102.50
- The CGB10YR is at 1.64%
JGBS: Modestly Weaker At Lunch Ahead Of 20Y Supply
At the Tokyo lunch break, JGB futures are weaker, -18 compared to the settlement levels.
- (Bloomberg) -- The Bank of Japan shrank its balance sheet by 2.3% to 716.1 trillion yen in the past 10 days.
- Impact of data
- Cash JGBs are little changed across benchmarks out to the 30-year and 1bp cheaper beyond. The benchmark 20-year yield is 0.6bp lower at 2.353% ahead of today's supply.
- Today’s 20-year JGB auction follows very poor results across key metrics at last month’s auction. The low price underperformed dealer forecasts, according to a Bloomberg poll. Moreover, the cover ratio decreased to 2.5007x from 2.9639x in the prior auction and the auction tail lengthened dramatically from 0.34 to 1.14 – the longest since 1987.
- Today’s 20-year JGB auction offers an outright yield approximately 10bps below last month’s level and 25bps below the cycle high.
- Moreover, the 10/20 yield curve remains near its recent high, its steepest since 1999.
- Today's auction also comes after a tentative ceasefire between Israel and Iran, diminishing any haven bid it potentially may have enjoyed.
- Swap rates are 1-2bps higher, with a steeper curve. Swap spreads are wider.
JGBS AUCTION: Poll: 20-Year JGB Auction
*JAPAN 20Y GOVT BOND AUCTION MAY HAVE 100.50 LOWEST PRICE:POLL– BLOOMBERG
