Gold rallies to highest in a month as US jobs growth slows
Tuesday, 14 January 2014 00:01
REUTERS: Gold extended gains to a third session on Monday to hit its highest in a month after a surprisingly weak US jobs report stoked expectations that the Federal Reserve could temper the pace of its stimulus wind-down.
A weaker US dollar also supported prices, although physical demand in China - the world’s biggest bullion consumer - dropped off due to the rally in prices.
Spot gold was up 0.4% at $ 1,251.60 an ounce by 0313 GMT, after hitting $ 1,254.05 earlier - its highest since 12 December. “Prices may continue to rise till $ 1,267,” said Joyce Liu, an investment analyst at Phillip Futures. “As it’s earnings season for US equities, large disappointments in company earnings may also direct some funds back to gold.”
“However, the general macroeconomic sentiment and outlook continue to weigh on gold, especially as bond yields continue to rise and prospects for USD remain upbeat. As such, we would consider gold prices this week to be largely supported but vulnerable to end the recent rally.”
Gold lost nearly 30% of its value in 2013 as strong US economic data prompted the Fed to scale back its stimulus. In January, however, gold prices have been supported by weaker equities and robust demand in China ahead of the Lunar New Year.
A slowdown in outflows from SPDR Gold Trust GLD, the world’s largest gold-backed exchange-traded fund, has also helped.
Prices were given a renewed boost by Friday’s US nonfarm payroll data which showed that US employers hired the fewest workers in nearly three years in December.
On the Shanghai Gold Exchange, premiums for 99.99% purity gold XAU9999=SGEX fell to about $ 15 from Friday’s $ 18 as the price gain deterred some buyers.
Buying from China was strong last week due to New Year purchases but have now slowed, traders said.