Gold is back to a currency play, with prices surging only for British investors, as the pound posted the biggest drop in almost eight months.
Bullion priced in sterling on Friday rose as much as 2.2 percent to ￡1,007.52 per ounce, a seven-week high, after British Prime Minister Theresa May failed to win an overall majority.
In US dollar terms, gold futures fell, posting its first weekly loss in more than a month, as market attention for the rest of the world refocuses on the prospect of US interest rates rising next week.
The impact on the metal used as a hedge against political and economic uncertainties has been muted outside of the UK, even as May battles to survive amid calls for her resignation after a disastrous election that cost her party to lose its parliamentary majority just days before Brexit negotiations with the EU begin.
The US dollar rallied, while US Treasury yields rose, hurting gold’s appeal as an alternative investment.
“It seems like long liquidation on gold and it looks vulnerable to more setbacks,” Phil Streible, a senior market strategist at RJO Futures in Chicago, said in a telephone interview.
“Gold has been such a great trade and there was so much optimism, but it just failed to breach through US$1,300. People are now looking at interest rates, with bond yields rising,” Streible said.
Gold for August delivery on Friday fell about 0.6 percent to settle at US$1,268.80 an ounce on the Comex in New York, after slipping as much as 1 percent earlier. The contract is down 0.9 percent from last week’s US$1,280.20
Traders are pricing in a 96 percent chance that the US Federal Reserve might raise interest rates at its meeting next week, according to Fed fund futures data compiled by Bloomberg.
Some investors took advantage of higher prices for sterling-priced gold to sell positions, according to BullionVault, a London-based online trading platform.
“Traders were not as active as they were during the early hours of the Brexit referendum result,” BullionVault head of research Adrian Ash said in an e-mail.
“The political situation is anything but strong and stable,” said Jonathan Butler, a precious metals strategist at Mitsubishi Corp in London. “There is quite a bit of potential for support for gold, certainly in sterling and possibly also in [US] dollars, in the near term.”
PALLADIUM
In the main commodity markets, nothing is doing better than palladium this year.
The metal is up 30 percent, beating 33 other raw materials, including lean hogs and aluminum, tracked by Bloomberg.
On Friday, spot prices surged as much as 7.9 percent to a 16-year high of US$928.36 an ounce before settling at US$885.57 an ounce.
The metal gained 5.2 percent this week.
It is now almost as expensive as platinum for the first time since 2001, helped by Volkswagen AG’s emissions scandal two years ago that has prompted consumers to switch from diesel to gasoline cars.
RECYCLE: Taiwan would aid manufacturers in refining rare earths from discarded appliances, which would fit the nation’s circular economy goals, minister Kung said Taiwan would work with the US and Japan on a proposed cooperation initiative in response to Beijing’s newly announced rare earth export curbs, Minister of Economic Affairs Kung Ming-hsin (龔明鑫) said yesterday. China last week announced new restrictions requiring companies to obtain export licenses if their products contain more than 0.1 percent of Chinese-origin rare earths by value. US Secretary of the Treasury Scott Bessent on Wednesday responded by saying that Beijing was “unreliable” in its rare earths exports, adding that the US would “neither be commanded, nor controlled” by China, several media outlets reported. Japanese Minister of Finance Katsunobu Kato yesterday also
China Airlines Ltd (CAL, 中華航空) said it expects peak season effects in the fourth quarter to continue to boost demand for passenger flights and cargo services, after reporting its second-highest-ever September sales on Monday. The carrier said it posted NT$15.88 billion (US$517 million) in consolidated sales last month, trailing only September last year’s NT$16.01 billion. Last month, CAL generated NT$8.77 billion from its passenger flights and NT$5.37 billion from cargo services, it said. In the first nine months of this year, the carrier posted NT$154.93 billion in cumulative sales, up 2.62 percent from a year earlier, marking the second-highest level for the January-September
‘DRAMATIC AND POSITIVE’: AI growth would be better than it previously forecast and would stay robust even if the Chinese market became inaccessible for customers, it said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday raised its full-year revenue growth outlook after posting record profit for last quarter, despite growing market concern about an artificial intelligence (AI) bubble. The company said it expects revenue to expand about 35 percent year-on-year, driven mainly by faster-than-expected demand for leading-edge chips for AI applications. The world’s biggest contract chipmaker in July projected that revenue this year would expand about 30 percent in US dollar terms. The company also slightly hiked its capital expenditure for this year to US$40 billion to US$42 billion, compared with US$38 billion to US$42 billion it set previously. “AI demand actually
Jensen Huang (黃仁勳), founder and CEO of US-based artificial intelligence chip designer Nvidia Corp and Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) on Friday celebrated the first Nvidia Blackwell wafer produced on US soil. Huang visited TSMC’s advanced wafer fab in the US state of Arizona and joined the Taiwanese chipmaker’s executives to witness the efforts to “build the infrastructure that powers the world’s AI factories, right here in America,” Nvidia said in a statement. At the event, Huang joined Y.L. Wang (王英郎), vice president of operations at TSMC, in signing their names on the Blackwell wafer to
RSS