Gold dips, heads for second weekly loss

Gold slipped on Friday, under pressure from tumbling equity markets, a firmer dollar and worries about rising global interest rates.
Updated 09 February 2018
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Gold dips, heads for second weekly loss

LONDON: Gold slipped on Friday, under pressure from tumbling equity markets, a firmer dollar and worries about rising global interest rates, but still found some support as a safe haven asset in times of market turmoil.
The dollar rose against a currency basket, heading for its best week since late October, while a 4 percent drop in Chinese shares dealt a fresh blow to world markets that have been reeling on worries about rising borrowing costs and soaring volatility.
“Just like any other commodity gold is getting caught up in risk reduction, but overall the stock market gyrations have most certainly provided underlying support,” said Ole Hansen, head of commodity strategy at Saxo Bank. Although the dollar had strengthened, he said investors were watching to see if the US administration’s planned tax cuts boosted the economy.
“If it doesn’t, it could have a negative growth impact, that’s not going to be dollar-positive,” he said.
A strong dollar makes dollar-priced gold costlier for non-US investors. Spot gold fell 0.2 percent to $1,316.61 an ounce at 1300 GMT. Prices touched their lowest since Jan. 4 at $1,306.81 on Thursday, and the precious metal is down 1 percent for the week so far, heading for a second straight weekly drop.
US gold futures were flat at $1,318.90 per ounce. The yield on benchmark 10-year US Treasuries , which tends to be the driver of global borrowing costs, was hovering at 2.86 percent, just short of both its Thursday peak and Monday’s four-year high of 2.885 percent.
“The threat of rising interest rates will have some downside pressure on gold,” said Argonaut Securities analyst Helen Lau. “However, in the near-term gold will gain due to volatile markets.”
Rising yields increase the opportunity cost of holding non-yielding bullion. Holdings of SPDR Gold Trust , the world’s largest gold-backed exchange-traded fund, have fallen over the last three sessions, and declined 1.7 percent so far this week, the worst since the week ended July 30, 2017.
Silver fell 0.4 percent to $16.36 an ounce, after touching its lowest since Dec. 22, 2017 at $16.22 on Thursday. Platinum rose 0.1 percent to $970.20 an ounce. It hit its lowest since Jan. 10 at $965 in the previous session. Palladium rose 0.9 percent to $971.47.
It marked its lowest since Oct. 25, 2017 at $958.95 on Thursday. “Following the recent declines, platinum and palladium are back to parity. Given our outlook for a slowdown in global car sales, we do not see the recent sell-off in palladium as a buying opportunity and maintain a bearish view,” said Julius Baer in a note.


US in criminal probe of China's Huawei

Updated 17 January 2019
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US in criminal probe of China's Huawei

  • The Wall Street Journal said the US justice department is looking into allegations of theft of trade secrets from Huawei's US business partners
  • Huawei forcefully denied accusations that his firm engaged in espionage on behalf of the Chinese government

WASHINGTON: US authorities are in the "advanced" stages of a criminal probe that could result in an indictment of Chinese technology giant Huawei, a report said Wednesday.
The Wall Street Journal, citing anonymous sources, said the Department of Justice is looking into allegations of theft of trade secrets from Huawei's US business partners, including a T-Mobile robotic device used to test smartphones.
Huawei and the Department of Justice declined to comment on the media report.
However, Huawei noted that "Huawei and T-Mobile settled their disputes in 2017 following a US jury verdict finding neither damage, unjust enrichment nor willful and malicious conduct by Huawei in T-Mobile's trade secret claim."
The move would further escalate tensions between the US and China after the arrest last year in Canada of Huawei's chief financial officer Meng Wanzhou, who is the daughter of the company founder.
The case of Meng, under house arrest awaiting proceedings, has inflamed US-China and Canada-China relations.
Two Canadians have been detained in China since Meng's arrest and a third has been sentenced to death on drug trafficking charges -- moves observers see as attempts by Beijing to pressure Ottawa over her case.
Huawei, the second-largest global smartphone maker and biggest producer of telecommunications equipment, has for years been under scrutiny in the US over purported links to the Chinese government.
Huawei's reclusive founder Ren Zhengfei, in a rare media interview Tuesday, forcefully denied accusations that his firm engaged in espionage on behalf of the Chinese government.
The tensions come amid a backdrop of President Donald Trump's efforts to get more manufacturing on US soil and slap hefty tariffs on Chinese goods for what he claims are unfair trade practices by Beijing.
In a related move, lawmakers introduced a bill to ban the export of American parts and components to Chinese telecom companies that are in violation of US export control or sanctions laws -- with Huawei and fellow Chinese firm ZTE the likely targets.
"Huawei is effectively an intelligence-gathering arm of the Chinese Communist Party whose founder and CEO was an engineer for the People's Liberation Army," said Republican Senator Tom Cotton, one of the bill's sponsors.
Democratic Senator Chris Van Hollen said in the same statement: "Huawei and ZTE are two sides of the same coin. Both companies have repeatedly violated US laws, represent a significant risk to American national security interests and need to be held accountable."
Last year, Trump reached a deal with ZTE that eases tough financial penalties on the firm for helping Iran and North Korea evade American sanctions.
Trump said his decision in May to spare ZTE came following an appeal by Chinese President Xi Jinping to help save Chinese jobs.