Gold traded near a one-month high after jumping the most since March on Thursday as US-China tensions and a deepening global slowdown buoyed demand for haven assets.
Bullion surged 1.5 percent on Thursday and was heading for a run of three straight weekly gains after China likely fired missiles over Taiwan during military drills.
Beijing has responded aggressively after US House of Representatives Speaker Nancy Pelosi visited Taiwan this week, the highest-ranking US politician to visit the nation in 25 years.
There were more signs that the fight to cool inflation would weigh on global growth. The Bank of England unleashed its biggest rate hike in 27 years as it warned the UK is heading for more than a year of recession, while Cleveland Federal Reserve Bank President Loretta Mester said that US interest rates needed to be raised above 4 percent.
Gold has risen about 6 percent from a low on July 20, benefiting from a weakening dollar and falling US bond yields. Traders will be looking at US nonfarm payrolls data that were to be released yesterday for clues on the US Federal Reserve’s tightening path.
The report was likely to show that hiring softened last month, Bloomberg Economics said.
“Safe-haven demand continues to support gold ahead of the non-farm payroll data,” said Gnanasekar Thiagarajan, director at Commtrendz Risk Management Services. “It could get a bit choppy ahead of the data. Central banks acknowledging recession is also underpinning sentiment for the precious metal, which was under pressure due to rising yields.”
Spot gold rose 0.1 percent to US$1,792.60 an ounce as of 11:57am in Singapore and was up 1.5 percent this week.
It climbed to US$1,794.97 on Thursday, the highest intraday level since July 5.
The Bloomberg Dollar Spot Index edged higher. Silver, platinum and palladium advanced.
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.
Hong Kong authorities ramped up sales of the local dollar as the greenback’s slide threatened the foreign-exchange peg. The Hong Kong Monetary Authority (HKMA) sold a record HK$60.5 billion (US$7.8 billion) of the city’s currency, according to an alert sent on its Bloomberg page yesterday in Asia, after it tested the upper end of its trading band. That added to the HK$56.1 billion of sales versus the greenback since Friday. The rapid intervention signals efforts from the city’s authorities to limit the local currency’s moves within its HK$7.75 to HK$7.85 per US dollar trading band. Heavy sales of the local dollar by
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
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