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Gold near three-month low after robust U.S. jobs report

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SINGAPOREGold ticked up after an eight-day losing streak on Monday, but languished near its lowest in three months as surging U.S. nonfarm payrolls boosted expectations of a December rate hike in the United States.

Employers outside the farming sector added 271,000 jobs in October, the most in 10 months, and the jobless rate fell to a 7-1/2-year low of 5 percent, data on Friday showed. Economists had forecast nonfarm payrolls increasing 180,000 and the unemployment rate remaining at 5.1 percent.

As investors increased bets that the first rate increase in nearly a decade will come next month, they sent non-interest-paying gold tumbling to $1,084.90 an ounce on Friday, the lowest since August.

Spot gold rose 0.5 percent to $1,093.51 an ounce by 0639 GMT on short covering.

“Further downwards pressure is expected on the precious complex in the lead up to the December FOMC meeting,” MKS Group trader Sam Laughlin said, referring to the Fed’s Federal Open Market Committee.

“A recovery towards $1,100 isn’t out of the question, however, expect to see offers capping a run higher at this level,” he said.

Following the jobs report, futures markets were pricing in a 70 percent probability of a December rate hike, up from 58 percent before the data.

The dollar hit its highest in nearly seven months, while U.S. Treasury yields also jumped.

With gold’s technical picture deteriorating, analysts expect more declines.

The next major support level for gold is at a near-6-year low, according to ScotiaMocatta analysts.

“We are bearish gold and feel that the risk is for a test of the $1,044 level,” they said. Gold last traded at that level in February 2010.

Assets in SPDR Gold Trust, the top gold-backed exchange-traded fund, fell 0.40 percent to 669.09 tonnes on Friday, the lowest in nearly three months, as investors exited bullion.

Hedge funds and money managers cut a bullish stance in COMEX gold as they trimmed a silver net long position from a record high in the week to Nov. 3, U.S. Commodity Futures Trading Commission data showed on Friday.

China likely added about 14 tonnes of gold to its reserves in October, according to Reuters calculations from central bank data on Saturday.

Among other precious metals, platinum fell to a one-month low of $930.50 an ounce, before recovering modestly.

(Reporting by A. Ananthalakshmi; Editing by Himani Sarkar)

Source: R-Business


Asia shares mixed, dollar strong after US jobs data boosts case for Fed hike

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TOKYOAsian stocks were mixed, with Japanese and Chinese shares up, while the dollar stood at a 7-month high against its peers on Monday after robust U.S. jobs data bolstered expectations of an imminent Federal Reserve interest rate hike.

The stronger dollar in turn knocked commodities like crude oil and gold.

With the U.S. jobs release out of the way, spreadbetters are forecasting a slightly higher open for Britain’s FTSE, Germany’s DAX and France’s CAC.

Data on Friday showed nonfarm payrolls increased 271,000 in October, the largest gain since last December 2014. The U.S. unemployment rate fell to 5.0 percent, the lowest since April 2008.

However, the prospects of the Fed hiking rates for the first time in almost a decade and ending seven years of easy monetary policy, which has pump-primed global markets with flush liquidity, weighed on some riskier assets.

MSCI’s broadest index of Asia-Pacific shares outside Japan declined 1 percent, while Australian shares lost 1.6 percent on lower commodity prices. South Korea’s KOSPI dropped 0.6 percent and Indonesian shares lost 1.6 percent.

The gainers included Tokyo’s Nikkei which rose 2 percent thanks to a sharply weaker yen against the dollar.

Shanghai shares advanced 1.6 percent after securities regulators said it would allow initial public offerings to resume after a July halt.

The gains also followed disappointing Chinese trade data released on Sunday that showed the world’s second largest economy will have to do more to stimulate domestic demand.

In recent months, financial markets have been buffeted by uncertainty over the timing of the Fed’s rate hike, with some investors worrying that higher borrowing costs in the United States could hurt an already shaky global economy.

However, the fall in some Asian stock prices was measured, reflecting trading on Wall Street, which bounced from a selloff to end little changed on Friday.

“With (Fed Chair) Janet Yellen holding firm on a December rate hike expectation during her testimony to Congress on Thursday, and then the massive beat from the non-farm payrolls (NFP) on Friday, 2015 has been realigned with the beginning of the year’s expectations of at least one rate hike,” wrote Evan Lucas, market strategist at IG in Melbourne.

“What is also interesting from this realignment is the markets have not thrown a ‘tantrum’ or gone into ‘hysterics’ – yet. Time will tell, but the orderly movements of the NFP on Friday suggests the market will take a small increase to the Fed funds rate in its stride.”

Interest rates futures were pricing in a 70 percent probability that the U.S. central bank will raise borrowing costs next month, according to the CME Group’s FedWatch.

In currencies, the dollar index, a measure of the greenback’s strength against a basket of key currencies, stood near a 7-month high of 99.345.

The dollar advanced to a 2-1/2-month peak of 123.48 yen. The euro was steady at $1.0744, in striking distance of a 6-month trough of $1.0704 struck on Friday.

Higher Treasury yields supported the U.S. currency. U.S. debt yields soared on Friday in the wake of the strong jobs data, with the 2-year yield reaching a 5-1/2-year high.

The dollar’s strength is likely to extend ahead of a likely Fed rate hike in December, and could drag on prices of oil and other commodities, said Ben Le Brun, market analyst at OptionsXpress in Sydney.

Oil rebounded on bargain hunting after sliding on Friday, but the bullish dollar weighed on the commodity. A stronger greenback makes dollar-denominated commodities like oil expensive for purchasers.

Brent crude bounced 0.8 percent to $47.81 a barrel after shedding 1.2 percent on Friday.

Spot gold struggled near a 3-month low of $1,084.90 an ounce struck on Friday.

(Additional reporting by Manolo Serapio Jr in Manila; Editing by Shri Navaratnam and Richard Borsuk)

Source: R-Business

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