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.


UAE, Saudi Arabia optimistic world trading system can be restored, says survey

Updated 22 October 2018
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UAE, Saudi Arabia optimistic world trading system can be restored, says survey

  • Three quarters of respondents hopeful of 'working order'
  • Trade disputes cloud horizon in emerging markets

LONDON: More than three-quarters of respondents in the UAE and Saudi Arabia said that the troubled global trading system can be restored to “working order,” according to a survey.
Only 27 percent thought the system would be restored ‘soon’, while 49 percent said it would be a more ‘long-term’ recovery, the Bloomberg research published on Oct. 22 found.
More than half of those surveyed in the two Gulf countries were optimistic that trade will grow in the next five years, with only 26 percent saying there would be less trade over that time period.
The survey findings come just days after the director-general of the World Trade Organization, Roberto Azevedo, urged action to be taken to avoid “serious harm” to the global trading system, in a speech in London on Oct. 17.
A continuing trade dispute between China and the US has led to the two countries imposing a series of tariffs on various imports.
The survey found that 65 percent of Saudi and UAE respondents said they were learning about new technologies to prepare for the future economy, while a similar proportion were learning new skills and taking professional courses.
Global governance issues were viewed as the most critical issue challenging the future of trade, according to the respondents.
The global survey also found there was a divide in opinion between business leaders in the emerging markets and those in developed countries.
Almost two-thirds (63 percent) of emerging market business professionals said they believe there would be more trade in five years, compared to just 36 percent in developed markets that felt the same way.

“The survey reveals vast differences in perceptions for the future and highlights the need to bring together global leaders in business and government to find private-sector led solutions to some of the world’s biggest challenges,” said Justin B. Smith, chief executive officer, Bloomberg Media Group.