Gold little changed as Fed minutes boost tapering expectations
Melbourne-Australia (Jan 9) Gold traded little changed before a US jobs report tomorrow as investors weighed expectations that the Federal Reserve will make further cuts to its bond-buying programme against signs that lower prices boosted physical demand.
Bullion for immediate delivery was at US$1,227.40 (RM4,024) an ounce at 3:10pm in Singapore from US$1,225.94 yesterday, when prices dropped 0.5 per cent. Silver for immediate delivery lost 0.5 per cent and gained 0.9 per cent before trading little changed at US$19.5767 an ounce.
Minutes released yesterday of the Fed’s December meeting, at which policy makers decided to trim purchases to US$75 billion from US$85 billion, showed that some participants saw diminishing economic benefits from the programme. The UK’s Royal Mint ran out of 2014 Sovereign gold coins as lower prices spurred demand, while sales in the US climbed last month.
Gold is reacting these days to tapering more than anything, and the most important thing in gold is the clear disinterest from the investment community,” said Joel Crane, an analyst at Morgan Stanley. Physical demand is “preventing greater falls because it’s strong. Lower gold prices always spur a bit more physical demand,” he said.
Bullion tumbled to a six-month low of US$1,182.27 on December 31, capping the largest annual decline since 1981. While the US Mint last month sold the most American Eagle gold coins since June, holdings in exchange-traded products posted their 12th straight monthly contraction. Assets extended the drop this month, losing 13 tonnes, according to data compiled by Bloomberg.
Shanghai gold
Gold has been supported in 2014 partly on physical buying in Asia, with increased volumes on the Shanghai Gold Exchange and elevated premiums, UBS AG said in a January 7 report. The premium for immediate delivery in China climbed to US$31.21 an ounce on January 7, the highest in more than two weeks.
The Fed’s minutes yesterday may have increased expectations that the central bank may announce further tapering at its subsequent meetings, according to James Steel, an analyst at HSBC Securities (USA) Inc. Gold may trade sideways until the US jobs data is released, Steel said in a report.
Employers added 195,000 workers in December, down from 203,000 the previous month, according to economists in a Bloomberg survey before the Labour Department’s nonfarm payrolls report tomorrow. The unemployment rate will remain at 7 per cent, a separate survey showed. Companies boosted payrolls by 238,000 in December, the ADP Research Institute said yesterday.
Gold for February delivery was little changed at US$1,226.60 an ounce on the Comex in New York. Platinum for immediate delivery was at US$1,416.55 an ounce from US$1,417.32 yesterday, while palladium was little changed at US$737.55 an ounce.
