Gold rises, still near 3-month low

Kuwait Times - - BUSINESS -

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

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