LQwD FinTech Corp (LQWDF)

[the cork]

Gold rises towards $1140 an ounce after US jobs data

Non-farm payrolls numbers come in weaker than expected
January 8, 2010

Gold prices rose towards $1 140 (R8 345) an ounce on Friday after December's US non-farm payrolls data missed expectations, dampening expectations a US interest hike may be imminent and pressuring the dollar versus the euro.

Spot gold hit a high of $1 139.40 an ounce in the wake of the data and was bid at $1 135.60 an ounce at 16:13 SA time, against $1 131.40 late in New York on Thursday. Earlier it slipped as low as $1 119.45.

"People were largely going short into the market, and as the non-farm payrolls for December were slightly worse than expected, those shorts were covered," said Michael Widmer, an analyst at Bank of America Merrill Lynch.

"The dollar came off quite a lot on the back of it, and that contributed to pushing gold higher," he added.

US gold futures for February delivery on the COMEX division of the New York Mercantile Exchange rose $3.30 to $1 373.00 an ounce.

The dollar plunged against the euro after data showed US job losses were 85 000 last month, while markets were expecting no cuts.

The numbers dampened burgeoning hopes an economic recovery may be on the way, which might have led to a hike in US interest rates sooner rather than later.

Gold prices have benefited from low interest rates in the last year, which contributed to dollar weakness and cut the opportunity cost of holding non-interest bearing assets.

"The play for gold (this year) is speculating on the move in US interest rates," said Jeremy East, Standard Chartered's global head of commodity derivatives trading. "(The payrolls data) will obviously have an impact on expectations for that."


On the wider markets, oil prices eased after the data, while US stock futures pointed to a lower opening on Wall Street after the report. European shares briefly turned negative after the numbers.

INVESTMENT SOFT

Investment demand for gold-backed exchange-traded funds remained soft after a lacklustre start to the new year. The largest gold ETF, New York's SPDR Gold Trust, reported a further 0.4 tonne dip in its holdings on Thursday.

Its holdings have fallen 10 tonnes in 2010 so far, while those of London-based ETF Securities' gold-backed exchange traded products are down 19 000 ounces in the same period.

Spot silver tracked gold lower to $18.38 an ounce against $18.22. Platinum was at $1 563 an ounce versus $1 554.50, while palladium was at $428 an ounce against $424.

The United States' first platinum and palladium-backed ETPs are due to start trading in New York later on Friday, which will allow US investors to invest in the metals used in autocatalysts via an ETP.

"Both (platinum and palladium) could gain serious traction should ETF investment demand prove strong," James Moore, an analyst at TheBullionDesk.com, said in a note.

Investment appetite for the metals is expected to be firm this year as a turnaround in the global economy lifts car demand. Over half the world's platinum and palladium is consumed by carmakers.

China sold more than 13.5 million vehicles in 2009, the official Xinhua news agency said on Friday, overtaking the United States to become the world's largest auto market as government policy initiatives spurred demand. - Reuters
BOOKMARK THI

http://www.busrep.co.za/index.php?fArticleId=5306191&fSectionId=615&fSetId=662