Gold extends gains on weak US jobs data
SINGAPORE: Gold edged higher for a second session yesterday on speculation that the Federal Reserve would slow the pace of its stimulus tapering after a weak US jobs report raised questions over the state of economic recovery. Some analysts said the gains may not last as the labour market weakness could be due to weatherrelated issues.
Data on Friday showed that US job creation slowed sharply over the past two months, turning in the weakest performance in three years. “The fall in the nonfarm payrolls is only a blip. We think the US economic recovery is still on track,” said Barnabas Gan, an analyst at OCBC Bank.
“We have a bearish view on gold and expect prices to drop to $1,150 by the end of the year,” he said. Spot gold rose 0.4 percent to $1,272.10 an ounce by 0742 GMT, after gaining 0.7 percent in the previous session. Gold, often seen as a safe-haven investment, lost 28 percent of its value last year as the US economy showed continued signs of recovery, prompting the Fed to begin scaling back its bond-buying stimulus measures. The US central bank has said it aims to finish the tapering by the end of this year. The Fed is unlikely to reverse the decision to wind down its bond-buying program just because employers hired fewer workers than expected in January, a top bank official said on Friday.
China consumption
Consumer demand in China, the biggest bullion consumer, topped 1,000 tons for the first time in 2013, an industry body said yesterday. Chinese demand for jewellery and bullion has been robust since last year due to the slide in prices. However, demand is expected to drop slightly this year from the record levels seen in 2013.
China’s gold output in 2013 also reached a record high of 428.16 tons, making the country the world’s biggest producer for a seventh straight year. Gold premiums on the Shanghai Gold Exchange for 99.99 percent purity gold rose to about $12 from $11 on Friday. — Reuters