Gold prices yesterday broke US$4,000 for the first time as investors piled into the safe haven over expectations for US interest rate cuts and worries about the US government shutdown.
The rally in the precious metal also came after concerns that a tech-fueled rally that has sent some equity markets to record highs might have gone too far, fanning talk of an asset bubble.
Traders have been piling into gold all year, pushing it up more than 50 percent since the turn of the year. Yesterday, the metal climbed to a high of US$4,037.10, even as the US dollar has pushed up against most of its peers in the past few days. Silver was also within a few dollars of its own record high.
Photo: AFP
“The rapid rise in gold prices has been supported by rising inflows into [exchange-traded funds] and central bank buying, including solid demand from China, as gold benefits from political, economic and inflation uncertainty,” National Australia Bank senior economist Taylor Nugent said.
Pepperstone Group research head Chris Weston said that “funds and global reserve managers want a hedge — against fiscal recklessness, currency debasement, and unpredictable government policy — and gold sits squarely at the heart of that movement.”
In contrast, equity markets were more subdued in Asia as questions were asked about the hundreds of billions of dollars that have been invested in artificial intelligence (AI).
On Tuesday, a report that software firm Oracle Corp’s cloud computing profit margin was much lower than expected sent shivers through trading floors, with all three main indices on Wall Street falling into the red.
Tech firms, which have enjoyed strong buying this year, including in the past few months, led selling in Asia, with Alibaba Group Holding Ltd (阿里巴巴) and JD.com Inc (京東) down 1.61 percent and 1.17 percent respectively in Hong Kong, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) dropping 1.39 percent in Taipei and Renesas Electronics Corp 1.44 percent lower in Tokyo.
“The report on Oracle’s margins prompted investors in US markets to doubt artificial intelligence applications and dump AI related stocks overnight,” Hua Nan Securities Co (華南永昌證券) analyst Kevin Su (蘇俊宏) said, referring to a 0.67 percent decline in the tech-heavy NASDAQ and a 2.06 percent slide on the Philadelphia Semiconductor Index.
“The volatility on US markets gave local investors an excuse to pocket their gains built in recent sessions with TSMC in focus,” after its American depositary receipts lost 2.77 percent on Tuesday, Su said.
“However, I remain upbeat about AI development and have faith in TSMC’s fundamentals. The stock could lead the TAIEX to move higher after consolidation,” he said.
Taipei and Hong Kong were among the biggest losers, with the TAIEX down 0.54 percent and the Hang Seng closing 0.5 percent lower.
Tokyo, Sydney, Mumbai and Singapore also fell, while Wellington, Manila, Bangkok and Jakarta edged up with London, Paris and Frankfurt.
Additional reporting by CNA
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