Gold hits four-week low on firmer dollar amid US rate hike forecasts

An employee sorts gold bars in this file photo. (Reuters)
Updated 08 February 2018
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Gold hits four-week low on firmer dollar amid US rate hike forecasts

LONDON: Gold prices dropped for a third straight session on Thursday and hit a fresh four-week low as investors liquidated their long positions on a firmer dollar, while expectations of more US rate hikes this year also weighed on the market.
Spot gold was down 0.4 percent at $1,312.41 per ounce, after hitting its lowest since Jan. 10 at $1,309.51 earlier in the session. US gold futures for April delivery were nearly flat at $1,314.50 per ounce.
The dollar rose on Wednesday, marking its biggest one-day gain in more than three months against a basket of currencies. It was steady at 90.269 on Thursday.
“There was consistent selling on Comex ... and offers above the $1,320 cash level were enough to prevent an advance,” said MKS PAMP Group trader Alex Thorndike.
“Spot gold slowly began to work its way lower with ongoing liquidation seen from managed money and leveraged clients — those who were still buying aggressively above $1,340.”
Asian shares flirted with six-week lows on Thursday, while US stocks finished lower on Wednesday, losing ground late in the session as a jump in Treasury yields kept investor nervousness high. The US Federal Reserve will stick to its plan for “steady, gradual” interest rate increases, San Francisco Federal Reserve Bank President John Williams said on Wednesday despite market gyrations and strong data on US wage growth that has bond traders pricing in faster rising inflation.
Hikes in interest rates lead to higher bond yields and dampen the demand for non-yielding gold. The yellow metal is also used as a hedge against inflation.
“The shifting Fed narrative that is gathering hawkish following could be the most significant thorn in the gold bulls side,” said Stephen Innes, head of trading APAC at OANDA. Spot gold is expected to fall more to $1,301 as it has pierced below a support at $1,316 per ounce, according to Reuters technical analyst Wang Tao. Holdings at SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund (ETF), dropped 0.29 percent to 826.90 tons on Wednesday from 829.27 tons on Tuesday. Holdings fell for a second straight session after they marked their worst one-day drop since December 2016 on Tuesday.
“The heavy falls in equities appear to have impacted ETF investors,” ANZ analysts said in a note.
Among other precious metals, silver was little changed at $16.37 per ounce after touching its lowest since Dec. 22 at $16.22 earlier in the session. Platinum declined 0.2 percent to $977.50 per ounce, after touching its lowest since Jan. 11 on Wednesday. Palladium fell 0.3 percent to $981.55 per ounce. Earlier in the session, it hit $977.22, its lowest since Nov. 15.


Dubai regulators move against Abraaj Capital

Updated 17 August 2018
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Dubai regulators move against Abraaj Capital

  • Dubai regulators have implemented a winding up order against Abraaj Capital stopping it from doing any new business in the emirate’s financial center
  • The DFSA said it has also stopped Abraaj Capital from moving funds to other parts of the group

DUBAI: Dubai regulators have moved against Abraaj Capital, the UAE arm of the beleaguered private equity group, implementing a winding up order against it and stopping it doing any new business in the emirate’s financial center.

The Dubai Financial Services Authority, the regulatory arm of the Dubai International Financial Center (DIFC), announced the moves after the DIFC Courts earlier this month received a petition to wind up the troubled firm under UAE insolvency laws.

The court has appointed two liquidators from the accounting firm Deloitte to oversee the winding up order.

“The DFSA will continue to take all necessary actions within its remit to protect the interests of investors and the DIFC,” the regulator said in a statement.

 

The DFSA also said it has stopped Abraaj Capital from moving funds to other parts of the group.


The DFSA has been monitoring events at the company since the scandal at Abraaj broke in February, involving redirection of investment funds to purposes for which they were not intended.

Only a relatively small part of Abraaj’s operations fall under the remit of the DFSA. Most of its business and assets are located in the Cayman Islands, the domicile for its ultimate holding company Abraaj Holdings Limited (AHL) and its main operation business Abraaj Investment Management. The Cayman entities are also going through liquidation procedures.

The DFSA said: “Given the onset of financial difficulties of the wider Abraaj Group, the DFSA has been closely monitoring the activities of its regulated entity ACL. The DFSA has taken regulatory actions over the past few months in order to safeguard the interests of investors and the DIFC.

“Given such actions and the current matters surrounding the Abraaj Group, the DFSA continues to monitor the limited financial services activities currently being undertaken by ACL,” it added.

ACL was authorized to conduct various financial services from DIFC, including managing assets and fund administration, but restricted to funds established by the firm or members of its group.

It could also advise on financial products, arranging deals in investments, and arranging and advising on credit.

It is unprecedented for the DFSA to comment on a case while it is still under investigation, but the application in the DIFC Courts on Aug. 1 presented an opportunity to address investors and DIFC members who were concerned about the scandal, which some observers believe has been damaging for Dubai’s reputation as a regional financial hub.

FACTOID

The Dubai Financial Services Authority has been monitoring events at Abraaj since a scandal emerged involving redirection of investment funds to purposes for which they were not intended.