A robust U.S.jobs report on Friday could trigger another sell-off in gold, already facing weak technicals and investor outflows.
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The Dow was up Wednesday morning before Yellen’s comments on rate hikes, then it slid into negative territory.
And as a result, Michael Gapen and his team at Barclays have reversed their August call for the Federal Reserve to wait until March 2016 to raise interest rates and now think the Fed will hike in December. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. Bond yields are at their highest level since right before the Fed’s September meeting. “The Fed will become increasingly emboldened in its attempt to finally raise interest rates, if it sees that markets can remain resilient each time it mentions the potential of a December hike”.
“Moving in a timely fashion – if the data and the outlook justify such a move – is a prudent thing to do because we will be able to move in a more gradual and measured pace”, she said.
The two-year swap rate was unchanged at 2.76 percent and the 10-year swap rate rose 1 basis to 3.57 percent.
“This is all to say that perhaps the Fed is going to pull off what was once thought of as unachievable and (end near-zero interest rates) without blowing up the market”, said Kevin McNeil, USA rates strategist at RBS, in a note to investors late Thursday.
The dollar also got stronger as well, which means more misery for multinational businesses.
The report, from the Bureau of Labor Statistics, showed the jobless rate fell to 5% – the lowest rate in seven-and-a-half years.
Wall Street’s top banks expect the Federal Reserve to raise interest rates in December, and most brokerages said their conviction around such a move had increased in the last month, according to a Reuters poll conducted on Friday.
The Fed had postponed rate increases because of factors such as disappointing jobs figures during the summer, global market turmoil triggered by China slowdown and the eurozone’s failure to resolve the Greek financial collapse.
Palladium dropped as much as 4.2 per cent to a six-week low of $US600 an ounce and was on track for its biggest weekly loss in more than four years.
Payroll estimates of 75 economists in the Bloomberg survey ranged from gains of 75,000 to 250,000 after a previously reported 142,000 September advance.
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OIL: Benchmark USA crude futures fell 45 cents to $45.87 per barrel in electronic trading on the New York Mercantile Exchange.
