Gold on Friday hit a more than three-week high, amid speculation that the US Federal Reserve could slow the pace of interest rate increases as the US economy slows.
Bullion’s climb, supported by a weaker US dollar and declining US Treasury yields, saw spot gold gain about 0.4 percent to US$1,762.50 an ounce to post a second straight weekly gain.
While the Fed raised rates by 75 basis points again this week, data showing that the US is in a technical recession signaled that the central bank could become less aggressive as it continues to combat inflation.
Despite the recent rebound, gold recorded a fourth straight monthly loss.
US Secretary of the Treasury Janet Yellen gave a glass-half-full assessment of the economy, acknowledging a slowdown she called necessary to tame inflation, while rejecting the notion the country had entered a recession.
“Gold bugs are falling like dominoes, but given the slowing trend in growth, [US Fed Chairman Jerome] Powell catalyzed a short covering rally across all assets by tying a jumbo-sized September hike to data. Gold markets are set-up for additional price weakness to ensue,” TD Securities senior strategist Daniel Ghali said in a note.
Investors are likely to turn their focus to next week’s monthly jobs report from the US government, which is forecast to show another solid month of hiring.
Powell said the labor market remains “extremely tight,” referencing a near-record number of job openings and historically low unemployment.
“If the US economic data turn out to be weaker next week, gold is likely to make further gains,” Commerzbank AG analyst Carsten Fritsch said in a note.
“This applies in particular to the report on the labor market, as Fed Chair Powell has still been describing the market as robust, which besides the persistently high inflation is another argument in favor of further rate hikes,” Fritsch said.
Other commodities:
‧Silver for September delivery rose US$0.33 to US$20.20 an ounce, up 8.49 percent from a week earlier, while September copper rose US$0.10 to US$3.57 a pound, gaining 6.57 percent weekly.
Additional reporting by Reuters and AP
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
RSS