Gold still under pressure from strong dollar
Singapore (Oct 3) Gold was poised for a fouther weekly loss in five on Friday, hurt by the strength of the dollar in rrecent weeks. Silver, platinum and palladium are all headed for their fifth weekly decline in a row.
All eyes are now on US nonfarm payrolls later in the day for more clues about the strength of the US economy, and the effect of the data on monetary policy and the dollar.
Markets believe robust US economic data could prompt the US Federal Reserve to raise interest rates sooner and faster than expected. That would hurt gold and other noninterest-bearing assets.
Higher rates could boost the dollar, which also tends to depress dollar-denominated gold since it makes bullion more expensive for holders of other currencies.
"Platinum group metals continue to be subject to investor liquidation, which is more than offsetting physical interest," HSBC analyst James Steel said. "Bargain-hunting may emerge if the platinum-gold spread contracts further."
The spread was about $35/oz on Friday, much lower than the $130 seen at the beginning of September.
"The technical momentum (for platinum and palladium) is lower and we believe the fundamental argument, while sound in the long term, will not necessarily bring buyers in immediately," Mr Steel said.
Platinum, the biggest loser among precious metals on Friday, tumbled nearly 2% to $1,237.40/oz, its lowest since September 2009, before recovering modestly to trade at $1,247.75 by 3.17am GMT. Palladium also slid.
Meanwhile, spot gold slipped slightly to $1,212.89.
The metal has fallen 0.5% this week, hurt by a combination of strong US data and the dollar. With top-buyer China away on a week-long holiday, gold is not getting much help from the physical markets, either. Pro-democracy rallies in Hong Kong provided some support to gold this week, helping it recover from a nine-month low, but not enough to reverse all the losses from a stronger dollar.
SPDR Gold Trust, the top gold-backed exchange-traded fund and a good proxy for investor sentiment, said its holdings fell 1.19 tonnes on Thursday to 767.47 tonnes, the lowest since December 2008.
Source: Reuters
