Advertisement

HindustanTimes Sat,20 Sep 2014

Gold near 2-week lows on stronger dollar, US data

Reuters  Singapore, November 01, 2013
First Published: 10:46 IST(1/11/2013) | Last Updated: 10:49 IST(1/11/2013)

Gold was flat on Friday, trading close to its lowest in nearly two weeks after sharp losses in the previous session caused by month-end profit taking, strong US economic data and a higher dollar.

Advertisement

The metal is headed for a 2 percent weekly drop -- its first in three weeks -- with expectations the Federal Reserve will maintain its economic stimulus now factored in. Prices had gained 8 percent since hitting a three-month low in mid-October after soft US data last month and Washington's budget gridlock led investors to believe the Fed would postpone the tapering of its bullion-friendly stimulus measures.

However, stronger US data has rekindled some fears that a December tapering is possible, so investors have sold gold. Spot gold had edged up 0.1 percent to $1,324.61 an ounce by 0345 GMT after Thursday's 1.4 percent slide. "Until tapering begins, gold will be able to trade at this level in a tight range for a considerable period of time," said Helen Lau, an analyst at UOB Kay Hian Securities in Hong Kong. The pace of business activity in the US Midwest jumped higher than expected in October and US jobless claims declined last week in welcome news for the battered labour market.

Investors worry an improving economy could prompt the US central bank to cut back soon on its $85 billion monthly bond purchases. "Gold prices are still under pressure from outflows from exchange-traded funds (ETFs). At the same time, retail demand is very healthy," said Lau.

China bought more than 100 tonnes of gold from Hong Kong for a fifth straight month in September as demand for bullion bars and jewellery stayed strong, keeping it on track to overtake India as the world's biggest gold consumer this year.

"There is strong demand even after the April rush. I think the demand is still sustainable," Lau said. Gold prices fell sharply in mid-April -- about $200 an ounce in two days -- prompting strong pent-up demand in Asia for jewellery, bars and coins. The metal has fallen about 20 percent this year as investors have dumped holdings in ETFs and switched to higher-yielding assets like stocks. SPDR Gold Trust, the biggest gold-backed ETF, has seen outflows of over $20 billion this year, weighing heavily on global prices. Holdings of the fund are near four-year lows.


Advertisement
more from Business

Larry Ellison steps down as Oracle CEO after 37 years

Larry Ellison, co-founder and leader of Oracle Corp for 37 years, stepped aside as chief executive officer on Thursday, to be replaced by co-CEOs Safra Catz and Mark Hurd, raising questions about a job-sharing arrangement that has had a fraught record elsewhere.
markets
Advertisement
Most Popular
Advertisement
Advertisement
Copyright © 2014 HT Media Limited. All Rights Reserved