Broker's Notes: Gold rebounds; US dollar slips towards a 15-year low against yen

Gold

Gold rebounded from lows on Thursday as bargain hunters resurfaced after prices struggled to revisit a lifetime high set in June, although firmer equities were likely to cap gains.  The US economy has shown "widespread signs" of slowing over recent weeks, the Federal Reserve said on Wednesday in a report suggesting that while the recovery has been faltering, the economy may skirt a second recession. Demand in India, the world's largest consumer, rises during the festive season, beginning with Raksha Bandhan in August and lasting through November with Dhanteras - the single-biggest gold buying day.

US dollar

The dollar slipped towards a 15-year low against the yen on Thursday as traders bet that Japanese authorities are not yet ready to intervene. There had been speculation that Japanese intervention might be imminent after talk swirled in the market late on Wednesday that Japanese authorities had checked rates, prompting short-term players to go long on the yen. But wariness about intervention is tapering off as nothing has happened up to now, and those who bought the yen might be unwinding their positions. Wariness about intervention helped to push the dollar up briefly in early trade but it failed to sustain a rise above 84 yen, its five-day moving average.

Australian dollar

The Australian dollar hit a four-month high against the US dollar on solid Australian jobs data. The data boosted expectations that Australia will raise rates in the future, with the OIS pricing in one more rate hike within a year. The statistics bureau said the number of people employed in the nation rose by 30,900 in August, exceeding the 25,000 forecast by economists. The jobless rate declined to 5.1 percent from 5.3 percent in July, the report showed.

Euro

A better than expected Portuguese auction yesterday led to consolidation in markets. However the markets were reluctant to bid the currency higher. What’s hurting the euro currency more isn’t just the doubts about the health of financial sectors or the effectiveness of the so called tests but doubts over central banks credibility in handling this crisis as they run out of possible solutions. Euro slipped by 0.23% in the early trade sessions of Thursday and seems to be holding above the key supports.  Later on Thursday, the Bank of England will hold a monetary policy meeting, where it is expected to keep rates on hold at 0.5 percent and to refrain from increasing its asset purchase programme.

Oil

Oil rose on Wednesday for the first time in three sessions, bouncing with equities and supported by a weaker dollar as concerns over the European banking system eased and investors cautiously bought riskier assets. Markets await the data from the Energy Department report today which will probably show US crude supplies climbed 1 million barrels last week. Gasoline demand slid to the lowest level in six months last week, according to MasterCard Inc.’s SpendingPulse report yesterday. With little disruption to energy operations from tropical weather so far this season, the US National Hurricane Center was monitoring newly formed Tropical Storm Igor and two other systems in the Atlantic Ocean. The systems were not yet expected to threaten energy operations in the Gulf of Mexico.

Source: Richcomm Global, Dubai; www.richcommglobal.com