Gold rises, still near 3-month low
LONDON: Gold rose yesterday, snapping an eight-day losing streak as the dollar edged down, but still hovered near its lowest in three months as surging US jobs data boosted expectations of a US rate rise in December.
Spot gold was up 0.5 percent at $1,093.35 an ounce by 1242 GMT, while US gold futures for December delivery rose $5.00 to $1,192.60 an ounce. US data on Friday showed 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. Economists had forecast nonfarm payrolls increasing 180,000 and the unemployment rate remaining at 5.1 percent.
As a result, investors increased bets that the first US rate increase in nearly a decade will come next month, sending non-interest-paying gold to $1,084.90 an ounce on Friday, the lowest since August. “This back and forth on expectation of what the Fed will do is going to keep the market busy in the short term at least,” Julius Baer analyst Carsten Menke said. “We really have to concentrate on whether growth is sound in the US (but) we are not going to have an inflation problem, so from that perspective there is no investment case to be done for gold,” he added.
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. “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 Federal Reserve’s Federal Open Market Committee.
With gold’s technical picture deteriorating, analysts expect more declines. The next major support level for gold is at a near six-year low, according to Scotia-Mocatta analysts.
Assets in SPDR Gold Trust, the top goldbacked 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, US 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, palladium fell 4 percent to $593.50 an ounce, its lowest in seven weeks. Prices posted the biggest weekly fall since September 2011 last week, hurt by sharp outflows from exchange-traded funds. —Reuters