Gold surges B300 but prospects dim

Gold prices jumped 300 baht to 19,700 baht per baht-weight in Bangkok on Saturday.

The Gold Traders Association announced the buying price at 19,700 baht and the selling price at 19,600 baht per baht-weight for bullion.

For ornaments, the buying and selling prices were 19,313.84 baht and 20,100 baht per baht-weight respectively.

The prices were adjusted twice on Friday for a total gain of 100 baht per baht-weight from the previous day.

Bloomberg reported from New York on Saturday investors are once again facing the spectre of rising US interest rates.  

A government report Friday showed the US jobless rate fell in January to the lowest since 2008, while hourly earnings rose more than estimated, bolstering the case for the Federal Reserve to tighten monetary policy further.

The dollar advanced, curbing gold’s appeal as an alternative asset. The metal receded from a three-month high touched before the jobs report.

Bullion has been the best-performing metal this year in the Bloomberg Commodity Index as a sell-off in global equities and signs of uneven US economic growth fuelled bets that the Fed would hold off on raising rates again.

Higher rates reduce the appeal of precious metals, which don’t pay interest.

Fed-fund futures show the odds of a rate increase in December have climbed to 53%, from 46% on Thursday.

“Investors are going to focus on the average hourly wages because that’s what the Fed was looking for — the uptick in wages,” Chris Gaffney, president of EverBank World Markets in St Louis, said in a telephone interview.

“While March still probably isn’t on the table, I think that with this report there’s a possibility that interest rates will go higher in 2016, and that’s why you’re seeing the metals sell off a bit here,” he said.

Gold futures for April delivery fell as much as 1% to $1,145.50 an ounce, before settling little changed at $1,157.70 at 1.42pm on the Comex in New York.

Before the jobs report, prices climbed to $1,164, the highest since Oct 28. The metal is up 9.2% this year, after posting three straight annual declines.

Fed Bank of Dallas President Robert Kaplan said Thursday that it’s premature to judge what policy makers will decide about rates at their meeting in March, as they gauge the implications of a dimmer global outlook for US jobs and inflation.

“The market has pre-positioned for something a little bit more negative than we got” in the jobs data, Bart Melek, the head of commodity strategy at TD Securities in Toronto, said in a telephone interview. “It’s not as weak as some gold traders were hoping for. A stronger dollar certainly is not helping gold.”