Gold remained firm on Friday after weaker-than-expected US non-farm payrolls data, as the dollar softened a touch against the euro and oil ticked up. Spot gold was quoted at $736.25/738.25 at 1456 GMT against $731.55 in late New York trade on Thursday.
"We are pretty much range-trading here in gold, as the US dollar didn't react too much after the figures," said Commerzbank senior trader Michael Kempinski. "We see some physical demand at $730 and lower," he added. Data released by the Labour Department showed US employers cut payrolls by 240,000 in October, while the unemployment rate hit 6.5 percent, its highest since 1994.
Gold has been pressured in recent months by a recovery in the dollar against the euro, with investors worrying about the spreading economic crisis. Strength in the US currency tends to weigh on gold, which is often bought as a currency hedge. Some forex analysts believe the dollar is set to remain firm despite a stream of negative data on the US economy.
Fears over the outlook for the global economy are boosting the precious metal's appeal as a haven from risk. A series of interest rate cuts in Europe on Thursday provided a temporary fillip to stock markets, but the gains were not sustained. "While (the cuts) add to the enormous monetary stimulus already in motion globally, markets remain unconvinced that it is enough to save the world from a major economic downturn," noted Standard Bank analyst Walter de Wet.
Nontheless, a low interest rate environment should boost the appeal of gold, as it will cut the opportunity cost of investing in non-interest bearing assets such as the precious metals. Platinum was at $844.50/864.50 an ounce against $823, having earlier touched a high of $865.50. Its sister metal palladium tracked it higher to a peak of $230 an ounce, before easing to $224/234 against $214.50.
A supply outage in major producer South Africa, where Anglo Platinum said a smelter shutdown would cut output by up to 200,000 ounces, and a weaker dollar are helping platinum to rise, analysts said. "People are looking at the charts and realising both platinum and palladium have broken out of the downtrend in the charts, and that is bringing in more funds on the long side," says Mitsubishi precious metals strategist Tom Kendall.
Interest in platinum has been renewed after the metal fell more than 50 percent from July onwards, with investors seeking to buy into the metal at lower prices, traders said. Both platinum and palladium have been pressured sharply lower by fears demand for the metals from automakers, who account for around half of annual consumption, will decline in the face of the economic slowdown.
Ford Motor Co posted a worse-than-expected quarterly loss on Friday and said it will explore asset sales as its cash reserves become depleted as sales fall. Among other precious metals, spot silver edged up to $9.99/10.09 from $9.96 an ounce late in New York on Thursday.
Comments
Comments are closed.