Gold set for weekly drop on US data; jobs report loomsREUTERS, Fri. Dec 6, 2013 07:41 WIB - Gold steadied on Friday after choppy trading in the previous session, though was still...
Markets are now awaiting nonfarm payroll data that is set to be released later on Friday and could provide more clues on the timing of stimulus tapering.
Spot gold was up 0.2 percent to $1,226.50 an ounce by 0021 GMT. The metal had fallen as much as 2 percent on Thursday to near its five-month low before paring some losses.
It is headed for a 2 percent weekly drop.
The U.S. economy grew faster than initially estimated in the third quarter but weak demand and a pile-up in business inventories buoyed the case for the Federal Reserve to keep up its bond-buying stimulus for now.
Indian gold premiums hit another record of $160 an ounce on Thursday, driven by lower supplies to meet firm demand for weddings, which will continue till May.
Selling gold that has yet to be mined to lock in a fixed price - a practice used by mining firms that went out of vogue as prices surged - may make sense for them again after a more than 20 percent drop in prices this year.
Investors continued to turn their backs on commodity exchange traded products in November with some $2.1 billion in global outflows, capping a dismal year for the gold-dominated asset class which has lost out to a rally in equities.
Deutsche Bank said it was significantly scaling back its global commodities business in response to regulatory changes, but would continue to operate its precious metals business.
Asian markets were heading into another trying session on Friday as speculation builds about an imminent scaling back in U.S. stimulus.
1100 Germany Industrial orders
1330 U.S. Nonfarm payrolls
1330 U.S. Unemployment rate
1330 U.S. Personal income
1455 U.S. Univ of Michigan sentiment index
1900 U.S. Consumer credit
Asian shares on defensive ahead of U.S. jobs testREUTERS, Fri. Dec 6, 2013 06:43 WIB - Asian markets were heading into another trying session on Friday as speculation builds...
Adding to the pain for Japanese stocks was a reversal in the dollar against the yen, and a negative for exporters. The Nikkei .N225 has shed 3.6 percent in the last two sessions and with futures trading at a discount a further drop was expected at the opening on Friday.
Given the index is still up 46 percent on the year so far, there would seem to be plenty of scope yet for profit-taking.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was flat after slipping 1.5 percent on Thursday.
The lead from Wall Street was again less than helpful with the Dow Jones .DJI and the S&P 500 .SPX both ending down 0.43 percent.
That marked a fifth straight day of losses as investors fretted about the risk the Federal Reserve will begin to taper its monthly debt purchases of $85 billion at its policy meeting on December 17 and 18.
Crucial to that decision could be the payrolls report for November due later Friday. The median forecast is for an increase of 180,000 in payrolls with the jobless rate steady at 7.2 percent.
The market would tend to see anything over 200,000 as greatly adding to the chance of a tapering this month, while a result under 150,000 would diminish the risk.
Still, it is worth remembering that total U.S. employment is over 136 million so the difference in a monthly rise in jobs of 150,000 or 200,000 is statistically insignificant, yet it has the power to move markets massively.
Not helping was that Thursday's U.S. data seemed strong on the surface but the detail was not so positive. While economic growth was revised up to an annualized 3.6 percent for the third quarter, all the increase came in a build up of inventories.
That led analysts to assume inventories would be run down this quarter and thus drag on growth.
Yet the headline number was enough to send yields on the benchmark 10-year U.S. Treasury note up to a three-month high of 2.88 percent.
For once, the rise in yields did not lift the U.S. dollar, in part because European yields jumped even more after European Central Bank President Mario Draghi sounded in no hurry to take further stimulative action.
In particular, the market was spooked when Draghi played down the need for another long-term liquidity operation (LTRO). Dealers had been hoping for just such an operation to ease a liquidity squeeze over year end.
As a result yields on two-year German government debt spiked to 21 basis points, from just 12 at the start of the week, and took the euro higher in their wake.
Early Friday, the single currency was up at $1.3671 having finally smashed through tough resistance at $1.3620. The next chart target was $1.3705/18, which would not be too distant from the 2013 peak of $1.3832.
Against the yen, it edged up to 139.14, but struggled to break above a five-year peak of 140.03 set earlier in the week. The dollar fared worse, dropping back to 101.71 yen and further away from the week's high of 103.37.
In commodities markets, spot gold was nursing losses at $1,224.69 after dropping 1 percent on Thursday.
U.S. crude was up 4 cents at $97.42, still benefiting from a drop in U.S. crude stocks. Going the other way, Brent crude fell 84 cents to $111.04.
Euro perks up as ECB signals no imminent action; USD eyes jobsREUTERS, Fri. Dec 6, 2013 06:24 WIB - The euro traded at five-week highs against the dollar early in Asia on Friday, having...
While ECB President Mario Draghi said the bank was ready to take fresh policy action to support a fragile recovery, he was light on details including whether the bank would use a negative deposit rate.
Draghi also noted that liquidity in the banking system had improved since the last cash injection, or LTRO, and attached conditions for any repeat. These comments saw German bond yields jump to seven-week highs, which in turn helped underpin the euro.
"The comments do not indicate any sense of urgency on the part of the ECB," London-based Martin McMahon, economist at Commonwealth Bank wrote in a note to clients.
"If there is to be a new LTRO, the ECB wants 'to make sure that it reaches the economy'. Again the comments do not indicate that follow-up LTROs are imminent."
The common currency last stood at $1.3672, having climbed more than 0.5 percent on Thursday to $1.3677, a level not seen since October 31. Against the yen, it edged up to 139.14, but struggled to break above a five-year peak of 140.03 set earlier in the week.
The euro also hit one-week highs against sterling, which showed little reaction to the Bank of England's decision to keep interest rates unchanged.
The common currency was fetching 83.68 pence, having risen as high as 83.79 earlier.
The rebound in the euro knocked the dollar index .DXY to a five-week low of 80.231. Further downside in the greenback hinges on how U.S. jobs data due later on Friday turns out.
Analysts polled by Reuters expect the U.S. economy to have created 180,000 jobs in November, following 183,900 in the previous month.
Any upside surprise will no doubt keep alive expectations the Federal Reserve may start to scale back its bond-buying stimulus program at the December 17-18 meeting. Such an outcome could bolster the U.S. dollar.
Conversely, a soft report will see the market expect the Fed to maintain its stimulus program for longer, a possible negative for the greenback but positive for riskier assets.
"A dismal development may encourage the FOMC to carry the highly accommodative policy stance into 2014 in order to encourage a stronger recovery," said David Song, currency analyst at DailyFX.
Fed uncertainty sends the Dow, S&P 500 down for fifth dayREUTERS, Fri. Dec 6, 2013 04:26 WIB - U.S. stocks fell on Thursday, with the Dow and S&P 500 dropping for a fifth...
The Dow and the S&P 500 are in their worst stretch since September. However, the moves have been slight, with the S&P 500 down about 1.2 percent over the period.
Gross domestic product grew at an annualized rate of 3.6 percent in the third quarter, the fastest pace since the first quarter of 2012 and faster than the 3 percent rate that had been expected. Another report showed that the number of Americans filing new claims for unemployment benefits unexpectedly fell last week in a hopeful sign for the labor market - a day ahead of the November nonfarm payrolls report.
Traders have been trying to second-guess how the Fed views strong data and whether the numbers are strong enough for the central bank to slow its $85 billion-a-month bond-buying program, which it said it would do when certain economic metrics meet its targets.
"The growing perception that the Fed will taper sooner rather than later may create some anxious moments in the market, as well as some anxiety for investors," said Clark Yingst, chief market analyst at Joseph Gunnar & Co in New York. "However, we think this is bullish for stocks and that the decline is a buying opportunity."
Expectations that the Fed might start tapering this month were dampened after Dennis Lockhart, the president of the Federal Reserve Bank of Atlanta, said the GDP data "doesn't make a trend and ... doesn't drive me to the conclusion that we've had a breakout in terms of growth."
The Dow Jones industrial average .DJI slipped 68.26 points, or 0.43 percent, to end at 15,821.51. The Standard & Poor's 500 Index .SPX fell 7.78 points, or 0.43 percent, to finish at 1,785.04. The Nasdaq Composite Index .IXIC dropped 4.84 points, or 0.12 percent, to close at 4,033.17.
The Dow and the S&P 500 are on track to post their first negative week in nine. Wall Street's recent rally, which took the Dow and the S&P 500 to all-time highs, came mostly on expectations that the Fed would hold steady with its stimulus. The three major U.S. stock indexes have each climbed more than 20 percent this year.
Apple (AAPL.O) rose 0.5 percent to $567.90 after China Mobile Ltd (0941.HK), the country's largest mobile operator, said it was still negotiating to offer iPhones on its network. A media report had earlier said that the long-awaited agreement had been reached. Earlier, Apple hit a 52-week high just above $575.
But Microsoft (MSFT.O) fell 2.4 percent to $38 in heavy volume. It was the biggest points decliner by far in the Nasdaq 100 .NDX and outweighed Apple's boost.
J.C. Penney Co Inc (JCP.N) shares tumbled 8.4 percent to $8.85 after Morgan Stanley reiterated its "underweight" rating on the stock and said November's 10 percent sales growth was not enough to change the company's outlook.
Other major U.S. retailers posted disappointing sales for November as cautious shoppers pinched their pennies at the start of the holiday season.
Costco (COST.O) shares fell 1.6 percent to $120.95 after the warehouse club chain said sales at stores open at least a year rose 2 percent, below the 3.3 percent increase that analysts were expecting.
But the stock of Dollar General Corp (DG.N) jumped 6.1 percent to $59.81 and ranked as the S&P 500's best performer after the discount retailer posted third-quarter earnings and said same-store sales rose 4.4 percent in the same period.
About 64 percent of the stocks traded on the New York Stock Exchange closed lower for the day, while 52 percent of Nasdaq-listed shares ended in negative territory.
About 5.1 billion shares traded on all U.S. platforms, according to BATS exchange data.
Gold drops 1 pct on uncertainty over Fed taperingREUTERS, Fri. Dec 6, 2013 02:21 WIB - Gold fell 1 percent on Thursday on encouraging U.S. economic growth data, but it...
Trading was extremely choppy. Bullion fell as much as 2 percent earlier in the session, but prices recovered as participants adjusted positions ahead of Friday's all-important November U.S. nonfarm payrolls, traders said.
Data released on Thursday showed the U.S. economy grew faster than initially estimated in the third quarter and that the number of Americans filing new claims for unemployment benefits unexpectedly fell last week, but underlying domestic demand remained sluggish, buoying the case for the Fed to stay with its $85 billion bond-buying stimulus.
"When gold climbed to the higher end of a recent range earlier today, there was a lot of algorithmic trading which drove prices lower," said Jeffrey Christian, managing director of commodities consultant CPM Group.
"We are in an extremely volatile market with a great deal of uncertainty."
Spot gold was down 1.1 percent at $1,229.69 per ounce by 2:05 p.m. EST (1905 GMT), sharply off a low of $1,216.84 earlier in the session.
U.S. Comex gold futures for February delivery settled down $15.30 at $1,231.90 an ounce, with trading volume on track to finish in line with its 30-day average, preliminary Reuters data showed.
Bullion gained the most in more than a month on Wednesday as investors aggressively bought back their bearish bets on fears of higher prices.
Holdings in SPDR Gold Trust GLD, the world's largest gold-backed exchange-traded fund, fell 2.70 tonnes to 838.71 tonnes on Wednesday, the lowest since early 2009.
On the mining front, the incoming chairman of Barrick Gold Corp, John Thornton, said he would consider a hedging strategy, given the volatility in the price of gold, but this did not mean Barrick was poised to change tack on the issue.
In other metals, silver followed gold's moves and was down 1.1 percent at $19.45 an ounce. Platinum fell 0.8 percent to $1,356.99, while palladium rose 0.8 percent to $730.50.