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Mon, May 09 2016, 05:41 GMT Reuters
Spot gold edged lower on Monday, but remained supported in the face of a firm dollar as investors bet a weaker US payroll report would push out the timing of any rate hike.
The US economy added the fewest number of jobs in seven months in April and Americans dropped out of the labour force, leaving some economists anticipating only one interest rate hike this year. But encouraging annual wage growth data helped the dollar to revive.
“Gold held on to a lot of the gains despite the strengthening dollar – it seems to be well supported,” said analyst Daniel Hynes at ANZ in Sydney.
“Investors certainly saw the payroll numbers being a positive in terms of no rate hike in the shorter term, which lessened the blow of that stronger currency,” he added.
Spot gold eased 0.2 per cent to US$1,286.11 an ounce by 0145 GMT, after hitting a five-month high last week, and is consolidating within a US$1,268-US$1,303 trading band. Spot gold closed little changed last week after a 5 per cent jump the week before.
US gold slipped half a per cent to US$1,288.20.
Helping the US dollar rebound, New York Federal Reserve President William Dudley said two US rate hikes this year were still a “reasonable expectation.” A stronger US dollar erodes the purchasing power of buyers paying with other currencies.
“We still expect the price of gold to rise further, underpinned by demand for inflation hedges as inflationary pressures continue to build,” said Capital Economics in a research note.
Elsewhere, a run of Chinese data this week is expected to show activity moderated in April after a strong showing in March. A Reuters poll forecast a small drop in all-important exports last month.
Hedge funds and money managers raised their net long positions in COMEX gold and copper contracts in the week to May 3, US Commodity Futures Trading Commission data showed on Friday.
China’s gold reserves stood at 58.14 million fine troy ounces at the end of April, up from 57.79 million fine troy ounces at the end of March, the central bank said.
Fri, May 06 2016, 09:59 GMT Reuters
[SINGAPORE] Gold was set to post its biggest weekly decline in six weeks on Friday as the US dollar firmed ahead of the US non-farm payrolls report that could provide clues about the Federal Reserve’s monetary policy.
A strong payrolls number could prompt the Fed to raise rates sooner than later, hurting non-interest paying gold. The metal has rallied nearly 21 per cent this year on expectations that the Fed will slow the pace of rate hikes.
Economists polled by Reuters forecast US employer’s likely added 202,000 workers in April following a 215,000 increase in March, with the jobless rate holding at 5 per cent.
Spot gold was little changed at US$1,278.63 an ounce by 0700 GMT. The metal has closed lower every session this week despite hitting a 15-month top of US$1,303.60 on Monday.
For the week, gold was set for a one per cent decline, its biggest weekly drop since the week ended March 25.
“If the jobs data is bad, gold will go up… But there is one more set of jobs data before the next Fed meeting in June,” said Helen Lau, an analyst at Argonaut Securities in Hong Kong.
“Gold’s outlook will be very data dependent. Right now, it is the currency trade and hawkish comments from Fed officials that are weighing on it,” she said.
The US dollar hit a one-week high against a basket of major currencies on Thursday after sliding to a 15-month low this week as traders closed out profitable bets against the greenback before the payrolls report.
The Fed raised rates for the first time in a decade in December from near zero but has since stood pat, in part because of global economic uncertainty.
Gold is sensitive to interest rates as rising rates lift the opportunity cost of holding non-yielding bullion.
St Louis Fed President James Bullard said on Thursday the Fed could raise rates at its meeting next month if the economic data calls for it, despite the fact that traders see only a slim chance of it happening.
Atlanta Fed President Dennis Lockhart said he was as yet undecided about backing a rate rise next month even though he expects the economy to rebound from a weak first quarter of growth.
Investor sentiment toward gold appeared to be bullish with assets of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rising to 829.44 tonnes on Thursday to the highest in over two years.
Among other precious metals, silver was poised for a near 3 per cent weekly loss, after four weeks of gains. Platinum was down one per cent on the week, snapping a five-week winning streak, while palladium was set to post a near 4 per cent loss for the week.
Gold held a three-day losing streak as investors assessed the outlook for US interest rates before monthly payroll data Friday.
Bullion for immediate delivery traded little changed at US$1,279.75 an ounce by 9:06 am in Singapore, according to Bloomberg generic pricing. Prices have retreated in the past three days after gold briefly surpassed US$1,300 earlier this week and reached the highest since Jan 2015.
The metal has climbed 21 per cent this year, helped by speculation that the Federal Reserve will be slow to tighten monetary policy amid global growth risks and after lending rates in the euro area and Japan fell below zero.
Fed officials are highlighting the prospect of a rate increase next month, with the payroll data key for investor assessment of the policy landscape. Holdings in exchange-traded funds rose to the highest since Dec 2013.
Markets are “waiting for clearer signals on whether US activity will bounce back in the second quarter or whether the loss of momentum will extend,” Australia & New Zealand Banking Group Ltd said on Thursday.
“Investor interest remains strong” for gold, it said.
[SINGAPORE] Gold fell a third day as the dollar rebounded on prospects of a US interest-rate increase next month, dimming the metal’s appeal as an alternative investment.
Bullion for immediate delivery fell as much as 0.5 per cent to US$1,279.75 an ounce and was at US$1,281.57 at 10:43 am in Singapore, according to Bloomberg generic pricing. The metal reached US$1,303.82 on Monday, the highest intraday level since January 2015.
Prices have rallied 21 per cent in 2016 after three years of losses, as investors returned to haven assets amid concerns that a deteriorating global economy may delay the end of low borrowing costs in the US The Bloomberg Dollar Spot Index, which tracks the greenback against 10 peers, rallied from a one- year low on Tuesday after two Federal Reserve officials said an interest-rate increase could be considered next month.
“Even though gold has retraced slightly, I am still bullish for this week,” said Raymond Mok, head of foreign exchange and bullion development at Sucden Financial (HK) Ltd.
“A weaker dollar and lower expectation of a rate hike” will be supportive of gold, he said.
Fed Bank of Atlanta chief Dennis Lockhart called a June rate hike “a real option,” while his San Francisco counterpart John Williams said he would support such a move if the US economy stayed on track.
Investors see a 12 per cent chance of a rate-rise next month, futures data show. Officials including St Louis Fed chief James Bullard are due to speak this week.
Bullion of 99.99 per cent purity fell as much as 1.1 per cent to 267.8 yuan a gram on the Shanghai Gold Exchange.
Spot silver fell 0.8 per cent, platinum retreated 0.5 per cent and palladium slid 0.4 per cent.
The Gold bullion regained momentum and climbed back into the positive territory as the US dollar turned lower against its major peers. However, the upside looks restricted as risk-on sentiment returned to markets following overnight recovery in the oil prices. The demand for the higher-yielding/ risk currencies is on the rise amid improving risk appetite on rallying Asian stocks, which keeps a lid on the prices.
Overnight, gold inched up in quiet, restrained trading as investors continued to await next week’s interest rate decision by the Federal Reserve for further indications on the path of tightening the U.S. central bank will embark on for the remainder of 2016.
Gold to remain in a holding pattern for the next several days ahead of the Federal Open Market Committee’s (FOMC) interest rate decision on April 27. Any rate hikes this year are viewed as bearish for gold which struggles to compete with high-yield bearing assets in rising rate environments.
The precious metal failed to sustain at higher levels in the last US session and extended its overnight retreat towards hourly 200-SMA around 1243-42 levels, before finding fresh bids in early Asia and swung back into gains. Looking ahead, the bullion now awaits the US datasets for fresh USD moves, while the upcoming ECB meeting is also expected to have significant impact on the USD priced-in gold.
The bullion poses a minor-recovery, although remains on the back foot amid renewed optimism in the Asian markets, which boosts the demand for the higher-yielding assets at expense of the safety bets.
Overnight, gold fell sharply on Wednesday amid a stronger dollar, as stellar trade data in China assuaged longstanding concerns on slowing growth in the world’s second-largest economy, dampening the precious metal’s appeal as a safe-haven asset.
Moreover, the US dollar remains strongly bid against its major peers on the back of a number of hawkish Fed speaks lately, and therefore, adds to the downside pressure on gold. Meanwhile, the US dollar index jumps +0.17% to 94.97 levels.
Focus U.S CPI Data.
The immediate focus remains on the US inflation figures that are expected to shed more light on the US economic progress and eventually on the Fed rate hike outlook.
Gold prices eased in early Asia on Wednesday with trade data out of China showing a mixed picture after exports unexpectedly soared.
Prices plunged to near hourly 100-MA level of $1246 levels before trimming losses to trade around $1250/barrel levels. Asian equities cheered a sharp rise in Chinese exports and have turned blind eye towards a 13.8% drop in imports. Japan’s Nikkei index spiked 2.8% following a 0.94% overnight rise in US equities.
Overnight, gold closed relatively flat on Tuesday, as the dollar bounced from eight-month lows, offsetting gains from earlier in the session when investors piled into the safe-haven asset after the International Monetary Fund lowered its global economic growth forecasts for the remainder of the year.
Since opening the year around $1,065 an ounce, gold has surged more than 18% in 2016 and is on pace for one of its strongest first halves in decades.
On Tuesday morning, the International Monetary Fund (IMF) cut its global growth forecast for 2016 in its latest World Economic Outlook (WEO), citing persistently low oil prices, a continued slowdown in the Chinese economy and weakness in advanced and emerging markets. As a result, the IMF now predicts that the global economy will increase by 3.2% in 2016, down slightly from forecasts of 3.4% three months ago. In advanced economies in particular, the IMF expects modest growth of 2% on the year, amid weak demand, unfavorable demographics and low productivity.
“Lower growth means less room for error,” said Maurice Obstfeld, IMF Economic Counsellor and Director of Research Maurice Obstfeld said in a statement. “Persistent slow growth has scarring effects that themselves reduce potential output and with it, demand and investment.”
As central banks worldwide continue to rely on negative interest rate policies (NIRPs) in an effort to stave off the threat of deflation, Obstfeld emphasized that major economies cannot solely rely on monetary policy alone to achieve their stated growth targets. Instead, Obstfeld noted that the nations must implement a more potent policy mix, combining revamped structural, fiscal and monetary policies.
“If national policymakers were to clearly recognize the risks they jointly face and act together to prepare for them, the positive effects on global confidence could be substantial,” Obstfeld said.
Gold is viewed as a safe-haven for investors in periods of heightened global economic instability.
Any rate hikes by the Fed this year are viewed as bearish for gold, which struggles to compete with high-yield bearing assets in rising rate environments.