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Gold bounces on weaker dollar, physical buying
Gold prices rose Friday after the dollar weakened and buying by jewelers emerged but weaker equities could still spur selling in bullion, which this week posted its biggest daily percentage gain in more than a month.
Funds cashed in gold to cover stock market losses, and investors also awaited the release of US jobs data that set the tone for the dollar and precious metals. The precious metal was nearly 30 percent below a record high above US$1,000 hit in March.
Gold hit a low of $724.75 an ounce before rebounding to
$735.60, up $2.65 from New York’s notional close on Thursday, when it moved in a $19 range to hit a session high of $760 before retreating.
“The non-farm payrolls data is coming out later tonight. It’s going to be relatively quiet ahead of that. In the meantime, it’s just drifting around with the dollar,” said Peter Tse, a dealer at Scottia Mocatta in Hong Kong. “Probably if gold dips below $720, we might see more physical buying around,” he said.
Gold gained as much as 6.2 percent this week to hit a session high of $768. It was still down from a two-month high of $931 hit in October but significantly higher than a 13-month low of $680.80 also struck last month.
“We are now at a lower range. I believe there’s a lot of demand from short-term speculators around the $700 to $720 level. They might be accumulating (gold) slowly,” said William Kwan, bullion director of Gold Capital Management.
“A lot of people are still buying gold coins. Retail investors are very happy to buy gold at these levels.”
On the physical front, premiums for gold bars were steady between $1.50 and $2 an ounce to spot London prices in Singapore.
Premiums were also stable in Hong Kong at between $2 and $3 an ounce.
“It’s cooling off a little but physical demand has been very good in the past two weeks.
Demand is so good in Thailand that we’ve seen streams of people buying gold at jewelry shops in Chinatown,” said a dealer in Singapore.
“We also heard many people crossed over to Thailand from Cambodia, Laos and Vietnam to buy jewelry,” he said.
Despite buying on dips by consumers, gold was struggling to revisit March’s record at $1,030.80, partly blamed on a slump in the equities markets that forced investors to cash in to make good losses.
In Vietnam, the price of gold at Saigon Jewelry Joint Stock Co., the country’s biggest gold trader, rose VND40,000 to VND16.68 million per tael, or $827 per ounce.
The massive gap between Vietnamese and global prices is caused by the fact that the two markets are no longer connected, said Huynh Trung Khanh, a consultant in Vietnam for the World Gold Council, adding this has given rise to smuggling into the country.
Customs officers caught a smuggler trying to bring in 4.8 kilograms of gold through the Bo Y checkpoint on the border with Laos at the end of last month, Saigon Tiep Thi newspaper reported. The Vietnamese government recently stopped the import of gold as part of measures to curb the trade gap.
Japan’s Nikkei index slid 3.6 percent Friday, with exporters tumbling on a firmer yen and fears of a deepening economic downturn.
Recession fears sent oil prices to below $60 a barrel for the first time in 20 months at one point Friday.
In theory, weaker oil prices reduce gold’s appeal as a hedge against inflation.
Among currencies, the euro rose to $1.2736 ahead of US jobs data which is likely to show that job cuts hit a five-year high of 200,000 in October, according to a Reuters poll, and October unemployment jumped to 6.3 percent from 6.1 percent.
Thanh Nien, Reuters
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