By Polina Devitt

LONDON (Reuters) - Global gold demand excluding over-the-counter (OTC) trading slipped 6% in the third quarter as central bank buying fell short of last year's record levels and consumption by jewellers declined, the World Gold Council (WGC) said on Tuesday.

The quarter's demand of 1,147.5 metric tons however stood 8% ahead of its five-year average, and official sector purchases in the full year are expected to approach their 2022 level, the WGC said in its quarterly demand trends report.

Gold demand shot to an 11-year high in 2022 due to the biggest central bank purchases on record.

"With geopolitical tensions on the rise and an expectation for continued robust central bank buying, gold demand may surprise to the upside," said Louise Street, senior markets analyst at the WGC.

Spot gold prices hit $2,009.29 an ounce on Friday, surpassing the key psychological $2,000 level for the first time since mid-May, as investors piled into safe-haven bullion amid the Middle East conflict.

Demand from investors, who see bullion as a safe asset during periods of instability, rose 56% in the third quarter, but remained weak compared to the five-year average, the WGC said.

Central bank demand totalled 337.1 tons, down from a record 458.8 tons a year before. For the first nine months of 2023 however, official sector gold purchases hit 800 tons, more than in any January-September period in WGC data going back to 2000.

"This strong buying streak from central banks is expected to stay on course for the remainder of the year, indicating a robust annual total again in 2023," WGC said.

Buying of gold bars and coins fell by 14% in July-September with lower demand in Europe. Outflows from exchange traded funds (ETFs) storing bullion for investors continued due to investor sentiment that interest rates would remain high.

Including OTC trading, which is conducted directly between two parties rather than via an exchange, total global gold demand rose 6% to 1,267.1 metric tons in the third quarter.

QUARTERLY GOLD SUPPLY AND DEMAND (tonnes)*

SUPPLY Q3 2023 Q2 2023 Q3 2022 y/y %

change

Mine production 971.1 912.7 949.1 +2

Net producer hedging 7.2 -19.5 -26.8

Recycled gold 288.8 322.9 268.3 +8

Total supply 1,267.1 1,216.1 1,190.6 +6

DEMAND Q3 2023 Q2 2023 Q3 2022 y/y %

change

Jewellery fabrication 578.2 492.8 582.6 -1

Technology 75.3 70.4 77.3 -3

- of which electronics 61.1 56.4 63.5 -4

- other Industrial 11.8 11.6 11.3 +4

- dentistry 2.3 2.4 2.5 -6

Investment 156.9 255.7 100.5 +56

- of which bar and coin 296.2 276.8 344.2 -14

- ETFs & similar products -139.3 -21.1 -243.7

Central banks & other inst. 337.1 174.8 458.8 -27

GOLD DEMAND 1,147.5 993.7 1,219.2 -6

OTC and other 119.6 222.4 -28.6

TOTAL DEMAND 1,267.1 1,216.1 1,190.6 +6

LBMA gold price, $/oz 1,928.5 1,975.9 1,728.9 +12

* Source: World Gold Council, Gold Demand Trends Q3 2023

Investing.com -- The U.S. Treasury lowered its estimate for federal borrowing for the current quarter as it looks to continue replenishing its coffers.

The Treasury Department lowered its net borrowing estimate for the October through December quarter to $776 trillion, down from the $852 billion amount it had forecast in late July. 

Ahead of the announcement some had been expecting the Treasury to revised down borrowing projections. 

“For Q4, we expect that borrowing projections will be revised down to $745B from $850B in the first cut,” Jefferies said in a note.

For the January to March 2024 quarter, Treasury expects to borrow $816 billion in privately-held net marketable debt, assuming an end-of-March cash balance of $750 billion.

Treasury yields were little changed following the news.  

The Treasury on Wednesday will release the Treasury’s Quarterly Refunding statement, which includes a breakdown of how it intends to issue the debt.

The Treasury's funding plans have taken on added importance in recent months as some have attributed increased Treasury supply as one of the reasons for the jump in Treasury yields to multi-month highs.  

The U.S. Treasury has stepped up the pace of U.S. government bonds issuance after depleting its reserves to fund government operations - following the debt ceiling debacle earlier this year. 

Goldman Sachs economists have revised their projections for U.S. GDP growth and the likelihood of a government shutdown, following changes in House leadership and geopolitical risks. The fourth quarter of 2023 is now expected to see a GDP growth of +1.6%, and the first quarter of 2024 is anticipated to record a +1.7% increase. These adjustments discard previous assumptions of a government shutdown.

Newly elected House Speaker, Mike Johnson (R-La), has committed to avoiding a government shutdown during his recent appearance on FOX News' "Sunday Morning Futures." Congress faces a deadline of November 17 to pass legislation preventing a partial shutdown. Johnson's proposed solution is a stopgap continuing resolution (CR) that extends funding until either January 15 or April 15 of next year, depending on the support from House Republicans.

The GOP's slim majority, which can only withstand four defections while passing legislation, may be put to the test with upcoming aid packages for Israel and Ukraine. The ousting of former House Speaker Kevin McCarthy (R-Calif) by eight GOP members led to a 22-day scramble for leadership, culminating in Johnson's election.

Goldman Sachs analysts caution that an extended reliance on short-term extensions decreases the likelihood of Congress securing a deal on full-year spending bills. This could potentially impact funding through to the end of the fiscal year on September 30, 2024.

Earlier, Goldman Sachs had predicted a 2-3 week government shutdown this quarter due to geopolitical tensions including the Israeli conflict and U.S. air strikes in Syria. However, this prediction has now been nullified due to changes in House leadership. Despite this, Goldman Sachs' economists, including Jan Hatzius, have emphasized potential triggers for future governmental disruptions such as unresolved policy disagreements and dependency on temporary extensions of spending bills. This could potentially lead to a shutdown in early 2024, resulting in instability in future government operations.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

By Jamie McGeever

(Reuters) - A look at the day ahead in Asian markets from Jamie McGeever, financial markets columnist.

Asia's economic calendar is jammed with top-tier releases on Tuesday, from Chinese purchasing managers index data to third quarter GDP figures from Hong Kong and Taiwan, but one stands above all others - the Bank of Japan's policy meeting.

Will the BOJ spook markets on Halloween and the final trading day of the month by effectively tightening monetary policy further with another tweak to its 'yield curve control' policy?

It is a huge week for global markets and policy - the BOJ's decision on Tuesday is the first of three major central bank pronouncements, with the U.S. Federal Reserve coming on Wednesday and the Bank of England on Thursday.

Speculation that the BOJ will act ramped up on Monday after Nikkei, citing sources close to the matter, reported that policymakers may further tweak YCC to allow the 10-year Japanese Government Bond yield to rise above 1%.

The yen rallied strongly for a second straight session, the 10-year yield rose again to a fresh decade-high nudging 0.89%, and the benchmark Nikkei 225 stock index gave back all of Friday's gains and slid 1%.

It is shaping up to be a year of two halves for Japanese stocks as the prospect of the BOJ abandoning its super-loose monetary policy becomes more likely. The Nikkei is down 3.6% this month, on track for its biggest monthly loss since December, and is down 8% so far in the second half of this year.

But it is still up 17% year-to-date thanks to a stunning 27% rally in the January-June period that saw it scale a 33-year high close to 34,000 points, as many investors bet that Japan Inc was back after years - decades - in the doldrums.

Negative interest rates, the BOJ accumulating 45% of all outstanding Japanese Government Bonds, and a 30% slide in the yen's value against the dollar since early 2021 made Japanese stocks extremely attractive.

By real effective exchange rate measures, the yen is its weakest in over 50 years, luring foreign buyers in to snap up assets on the relative cheap.

The question now is, how much of that is firmly in the rear-view mirror? And how far and how powerfully might the elastic snap back if a paradigm shift is underway and domestic borrowing costs keep on rising?

Inflation in Japan has finally taken off, and for the first time in decades, appears to be sticking well above 2%.

Also on Tuesday, China's PMI figures are expected to show that manufacturing activity grew slightly again in October, at the same pace as the previous month, according to a Reuters poll forecast.

After a deeply disappointing first half of the year, Chinese economic data have started to come in above expectations in recent months. Will this trend continue into the start of the fourth quarter?

Here are key developments that could provide more direction to markets on Tuesday:

- Bank of Japan policy decision

- China PMIs (October)

- Japan unemployment, industrial production, retail sales (September)

(By Jamie McGeever)

The International Monetary Fund (IMF) has projected a decrease in global growth to 3.0% in 2023, further declining to 2.9% in 2024, according to its "Navigating Global Divergences" report. This anticipated slowdown is attributed to multiple shocks including rising living costs, geo-economic fragmentation, the withdrawal of fiscal support, and cyclical factors.

Advanced economies are expected to experience a decline in growth from 2.6% to 1.5% in 2023 and further to 1.4% in 2024 due to policies aimed at curbing inflation. Meanwhile, developing economies are predicted to face a slight decrease from 4.1% in 2022 to 4.0% in the subsequent years, with disparities widening between regions.

Global inflation is set to decline from 8.7% in 2022 to 6.9% in 2023 and then further to 5.8% in 2024. This decline is attributed to tighter monetary policies and falling commodity prices, although core inflation pressures are expected to decrease at a slower pace.

The report also raises concerns about potential disruptions such as China's property sector crisis, the Ukraine conflict, extreme weather events, the transition to green energy, and potential spikes in food and energy prices due to climate and geopolitical shocks.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

By Wayne Cole

SYDNEY (Reuters) - Asian share markets were mixed on Monday as Israel's push into Gaza stirred fears of a wider conflict ahead of central bank meetings in the United States, Britain and Japan, the latter of which might see a policy tightening.

The earnings season also continues with Apple (NASDAQ:AAPL), Airbnb, McDonald's (NYSE:MCD), Moderna (NASDAQ:MRNA) and Eli Lilly & Co (NYSE:LLY) among the many reporting this week. Results so far have been underwhelming, contributing to the S&P 500's retreat into correction territory at 4,117.

"The price action is bad as SPX could not defend a key 4,200 level; risk is it heads to the 200-week moving average of 3,941 before a trading rally," BofA analysts said.

Early on Monday, S&P 500 futures had edged up 0.3% to 4,151, while Nasdaq futures added 0.5%. EUROSTOXX 50 futures slipped 0.2% and FTSE futures were flat.

Risk appetite was dulled by Israel's push to surround Gaza's main city in a self-declared "second phase" of a three-week war against Iranian-backed Hamas militants.

MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.2%, having hit a one-year low last week. Chinese blue chips firmed 0.1%.

China Evergrande (HK:3333) Group's shares fell 20% on Monday as Hong Kong's High Court hears a winding-up petition against the embattled property developer, nearly two years after it defaulted on its debts.

Japan's Nikkei fell 1.1% amid speculation the Bank of Japan (BOJ) might tweak its yield curve control (YCC) policy after its two-day policy meeting wraps up on Tuesday.

Many analysts expect the central bank will lift its inflation forecast to 2.0%, but are unsure whether it will finally abandon YCC in the face of market pressure on bonds.

"Remaining uncertainty about the wage outlook, combined with stresses in global bond markets could prompt the BOJ to err on the side of caution, making our view that YCC will be scrapped a very close call," said analysts at Barclays.

"The BOJ could still opt to revise policy but less drastically, perhaps by raising the ceiling for 10-year yields as it did in July."

Abandoning YCC altogether would likely see Japanese bond yields rise and add to pressure on global markets already bruised by a vicious sell-off in U.S. Treasuries.

FED ALL DONE?

Yields on 10-year Treasuries stood at 4.87% on Monday, having climbed 30 basis points so far this month and touched 16-year peaks at 5.021%.

Sentiment will be tested further this week when Treasury announces its refunding plans, with more increases likely. NatWest Markets expects $885 billion of marketable borrowing in the fourth quarter and $700 billion in the following quarter.

The sharp rise in market borrowing costs has convinced analysts the Federal Reserve will stand pat at its policy meeting this week, with futures implying a 97% chance of rates staying at 5.25-5.5%.

The market has also priced in 165 basis points of easing for 2024, starting around mid-year.

"The Fed appears to have coalesced around the view that the recent tightening in financial conditions led by higher long-term interest rates has made another hike unnecessary," said analysts at Goldman Sachs, who estimated the rise in yields was the equivalent of 100 basis points of rate increases.

"The story of the year so far has been that economic reacceleration has not prevented further labor market rebalancing and progress in the inflation fight," they added. "We expect this to continue in coming months."

Job figures due Friday are forecast to show U.S. payrolls rose a still solid 188,000 in October, after September's blockbuster gain, but annual growth in average earnings is still seen slowing to 4.0% from 4.2%.

The Bank of England is also expected to stay on hold this week, with markets pricing around a 70% chance it is done tightening altogether.

Oddly the ascent of U.S. yields has not helped the dollar any higher recently.

"Likewise, the fall in global equity markets and the ongoing uncertainty around the Hamas-Israel conflict has not done much to drive the dollar higher against risk-sensitive currencies," Capital Economics analysts wrote in a note.

"This reinforces our sense that a relatively optimistic assessment of the outlook in the U.S. is by now largely discounted in the dollar."

The dollar was steady against a basket of currencies at 106.580, having bounced between 105.350 and 106.890 last week. It firmed a touch on the yen to 149.74, but remained short of last week's top of 150.78.

The euro idled at $1.0562, and is almost unchanged on the month so far. [FRX/]

In commodity markets, gold was steady at $2,003 an ounce. [GOL/]

Oil prices eased as worries about demand outweighed risks to Middle East supplies, at least for the moment. [O/R]

Brent lost 65 cents to $89.83 a barrel, while U.S. crude fell 77 cents to $84.77.

BEIJING (Reuters) -China's aviation regulator said it will increase domestic flights to 34% above pre-pandemic levels, a move that will further boost the recovery of Chinese airlines.

China's top airlines reported their first quarterly profitsin more than three years on Friday, fanning industry hopes for China's big three state carriers to finally step out of the difficulties brought by the COVID-19 pandemic.

The Civil Aviation Administration of China will roll out its winter and spring season flight plan on Sunday, which will last until March 30, according to the summary of a Friday press conference on the website of CAAC News, which is run by the aviation regulator.

There will be 96,651 domestic flights a week, or 34% higher than the same period four years ago, with 7,202 new weekly flights brought on by the opening of 516 new domestic routes.

The increase in domestic flights focuses on connections between regional and hub airports like Shanghai, Beijing and Guangzhou, the regulator said.

International flights, while slower to recover, are also picking up steam. In the next five months there will be 16,680 weekly flights, with passenger flights expected to reach 71% of the total four years ago.

Flights to and from 22 countries, including Britain and Italy, have neared or overtaken pre-pandemic levels, the regulator said.

In the winter and spring season, weekly direct passenger flights between China and the United States are expected to increase to 70 from 48, according to a post on Sunday on the CAAC News WeChat account.

Investing.com -- It’s going to be a very busy week for investors, with a Federal Reserve meeting, the latest U.S. jobs report and earnings from technology heavyweight Apple that could set the direction for stocks and bonds the rest of the year. Here’s what you need to know to start your week.

Federal Reserve meeting

Investors will be turning their attention to the Federal Reserve’s policy meeting on Wednesday, eager to hear policymakers' views on the state of the economy and the outlook for interest rates.

Most investors are betting that the Fed is done tightening after Chair Jerome Powell said that rising long-term yields reduce the need for further rate increases, though some believe another hike could come when the central bank meets again in December.

Any indications that the Fed intends to keep rates around current levels through next year could bolster bets on further upside in Treasury yields, whose climb to their highest levels in more 15 years has contributed to a sharp sell-off in the S&P500.

The index has fallen more than 10% since hitting a year-high in late July, though is still up nearly 8% on the year.

Nonfarm payrolls data

The key piece of economic data this week will be Friday’s nonfarm payrolls report for October. After a blockbuster 336,000 jobs were added in September, economists are expecting more moderate jobs growth of 182,000, which is still consistent with a robust labor market.

The unemployment rate is expected to remain at 3.8%, while wage growth is expected to ease to 4% year-on-year, which would mark a post-pandemic period low. This could help bolster the Fed’s view that price pressures are easing and that it doesn't need to raise interest rates any further.

Ahead of Friday’s data, market participants will be looking at data on third-quarter employment costs on Tuesday for signs that wage growth is moderating.

Earnings

Apple (NASDAQ:AAPL) tops the bill in what is set to be another busy week of U.S. corporate earnings, with the iPhone maker reporting on Thursday.

Shares of Apple, the largest company by market value, have helped drive equity indexes higher this year along with shares of other megacap U.S. tech and growth companies.

Third quarter earnings season has seen disappointments from some Big Tech names, with shares of Alphabet (NASDAQ:GOOGL) and Tesla (NASDAQ:TSLA) slumping after their respective reports. The tech-heavy Nasdaq 100 index is down 11% from its high, though still up nearly 30% on the year.

Consumers' spending habits will also be in the spotlight with other companies set to report include McDonald's (NYSE:MCD) on Monday, Caterpillar (NYSE:CAT) and Pfizer (NYSE:PFE) on Tuesday, Mondelez (NASDAQ:MDLZ) on Wednesday, and Starbucks (NASDAQ:SBUX) and Eli Lilly (NYSE:LLY) on Thursday.

Bank of England

The Bank of England is to hold its penultimate meeting of the year on Thursday, where officials will need to decide whether to resume raising interest rates, having kept them on hold in September after 14 hikes in a row.

Investors are expecting the BoE to keep rates on hold at a 15-year high of 5.25%, while leaving the door open to further hikes if necessary. Policymakers are also expected to reiterate that rates will need to remain around current levels for quite some time to come despite growing signs that the economy is flat-lining.

The BoE will update its quarterly forecasts which in August showed economic growth of just 0.5% in both 2023 and 2024. Governor Andrew Bailey spoke earlier this month of a "very subdued" outlook.

Eurozone inflation and GDP

The European Central Bank kept interest rates on hold on Thursday after the steepest pace of rate hikes on record and will now be looking ahead to Tuesday’s data on inflation and gross domestic product ahead of its final meeting of the year.

Preliminary data on consumer price inflation is expected to show the headline rate slowing to 3.2% in October, coming closer to the ECB’s 2% target, even if high energy costs continue to pose an upside risk.

GDP data the same day is expected to show that the Eurozone economy contracted by 0.1% in the third quarter, for an annual rate of growth of just 0.2%.

On Thursday, ECB President Christine Lagarde hinted at steady policy ahead and pushed back against rate cut expectations.

--Reuters contributed to this report

By Hari Kishan

BENGALURU (Reuters) -High inflation will dog the world economy next year, with three-quarters of over 200 economists polled by Reuters saying the main risk is that it turns out higher than they forecast, suggesting interest rates will also remain higher for longer.

Several central banks are still expected to begin cutting interest rates by the middle of 2024, but a growing number of economists surveyed are adjusting their views, pushing the more likely date into the second half of next year.

This is a significant change from expectations at the start of this year. Then, some investment banks were predicting the U.S. Federal Reserve, which sets the tone for many others, would be cutting rates right around now.

Despite broad success in bringing inflation down from its highs - the easier bit - prices are still rising faster than most central banks would prefer and hitting their inflation targets is likely to be tough.

The latest Reuters poll of over 500 economists taken between Oct. 6 and Oct. 25 produced 2024 growth downgrades and inflation upgrades for a majority of the 48 economies around the world surveyed.

A 75% majority who answered a separate question, 171 of 228, said the risk to these broadly-upgraded inflation forecasts was skewed higher, with only 57 saying lower.

The results follow news on Thursday the U.S. economy unexpectedly grew nearly 5%, annualised, in the third quarter, underscoring how the strength of the world's largest economy is setting it apart from most of its peers.

The survey results also follow a warning from European Central Bank President Christine Lagarde, who said after the ECB snapped a 10-meeting tightening streak that "even having a discussion on a cut is totally, totally premature".

While many central banks, including the Fed and the ECB, have presented a "higher for longer" narrative on rates for the better part of this year, many economists and financial market traders have been reluctant to accept that view.

"I think all of us have to keep an open mind that maybe policy isn't restrictive enough," said Douglas Porter, chief economist at BMO.

"Our forecast is that the Fed has done enough and they don't have to raise rates further, but I haven't closed off the possibility we could be wrong and the Fed does ultimately have to do more."

While most economists still say the Fed will cut by mid-year, the latest poll shows just 55% backing that scenario compared with over 70% last month.

The Reserve Bank of New Zealand, which often leads the interest rate cycle, was also forecast to wait until July-September 2024 before cutting.

The majority backing no cuts until the second half of 2024 has also grown stronger for the Reserve Bank of Australia, Bank Indonesia and the Reserve Bank of India.

Even the Bank of Japan, the outlier sticking to ultra-loose policy through this entire round of inflation, is now expected to abandon negative interest rates next year.

Crucially, most economists agree the first easing steps will not be the beginning of a rapid series of cuts.

Asked what would prompt the first cut by the central bank they cover, over a two-thirds majority, 149 of 219, said it would be simply to make real interest rates less restrictive as inflation falls.

The remaining 70 said the first move would mark a shift towards stimulating the economy, suggesting only a minority expect a hard enough hit to demand and inflation hard to warrant monetary response.

Global economic growth was forecast to slow to 2.6% next year from an expected 2.9% this year.

"Central banks have had the highest rates in order to fight inflation ... it's certainly restraining activity, and it's going to be a while before we get global growth above what has been its historical average," said Nathan Sheets, global chief economist at Citi.

(For other stories from the Reuters global economic poll:)

BEIJING (Reuters) -Profits at China's industrial firms extended gains for a second month in September, adding to signs of a stabilising economy as the authorities launched a burst of supportive policy measures.

The 11.9% year-on-year rise came on the back of a surprise 17.2% gain in August, and follows stronger-than-expected industrial and consumption activity over September.

For the first nine months, profits slid 9% from a year earlier, narrowing from a 11.7% decline in the first eight months, data from the National Bureau of Statistics (NBS) showed on Friday.

Industrial profits recovered quarter by quarter and swung to a 7.7% growth in the July-September period from declines over the previous two quarters, NBS statistician Yu Weining said in an accompanying statement.

The September number reflects an overall improvement in domestic industrial sector operations and a continued recovery in market demand, said Zhou Maohua, an analyst at China Everbright (OTC:CHFFF) Bank, adding the slowdown in year-on-year growth was due to a high base last year.

A fall in producer prices last month indicated that some industrial firms were still cutting prices to promote sales, putting a drag on overall industrial revenues and profits, Zhou said.

The improvement in industrial profits is expected to sustain in the coming months, partly due to the lag effect in domestic macro pump-priming, he added.

China's blue chip CSI300 Index gained 0.6% after opening lower in the morning session.

A run of recent data has pointed to a steadying in the world's second-largest economy, which expanded at a faster-than-expected clip in the third quarter after a rapid loss of momentum following a brief post-COVID bounce.

Analysts attribute the stabilisation to a series of policy measures rolled out in the past few months, but the persistent weakness in the crisis-hit property sector remains a major drag on the economy and corporate earnings.

Last week, Chinese battery giant CATL reported a sharp slowdown in profit growth in the third quarter, its weakest quarter since the start of last year amid slowing demand and stiff competition.

In his first remarks on policy following third-quarter gross domestic product data, China's central bank governor Pan Gongsheng vowed to bolster the economic recovery, with a focus on expanding domestic demand while curbing financial risks.

According to a breakdown of the NBS data, state-owned firms saw earnings fall 11.5% in the first nine months, foreign firms booked a 10.5% decline and private-sector companies recorded a 3.2% slide.

Industrial profit numbers cover firms with annual revenues of at least 20 million yuan ($2.73 million) from their main operations.

($1 = 7.3150 Chinese yuan)