Market Insights - US Taper, Delta & Gold

Introduction

Welcome to our Gold news series, where we bring you short and sweet news updates on the global economy and gold market. Today's news update is on the US economy.

US Taper

Equity performance continues in full flow, with the S&P 500 Index trading 2% below the all-time high. Ten-Year Treasury yields have surpassed 1.6%, indicating that the bond markets are expecting a taper announcement by the Fed as early as November.
The top five largest US banks, such as Morgan Stanley, Bank Of America, Wells Fargo, Citigroup, and JP Morgan Chase, have reported quarterly earnings above expectations amid the pandemic and rising inflation fears.
There is much optimism for third-quarter earnings to continue, especially blue chips in financial, technology and consumer goods.
Cleveland Fed Chairman Loretta Mester believes that the reduction in bond purchases should begin soon. However, an interest rate hike is unlikely soon.

Delta & AY.4.2 Variant

A new sub-lineage of the notorious Delta variant called the AY.4.2 has spread across the United Kingdom. British health officials have confirmed that AY.4.2 is also spreading out towards the United States. The new strain is reported to be 10 to 15% more contagious than Delta.
Dr Rochelle Walensky, director of the (CDC) Center for Disease Control and Prevention, has confirmed AY.4.2 cases. She has acknowledged that the new strain has raised attention across the country.
The CDC has mentioned that AY.4.2 has not been linked to the recent clusters or increased cases. Furthermore, the CDC has also indicated that the AY.4.2 strain does not impact the effectiveness of the current vaccines.

Gold

Gold continues to perform in the mid $1,700. The precious metals support level is at $1,730, with resistance close towards $1,790. Analysts believe that gold should hold at its current range until clarity on the Fed taper is made.
Gold as a form of inflation hedge has some role in the recent concerns on rapid inflation figures.