“The revision in expectations for monetary policy in the U.S., Japan, the euro zone and the United Kingdom has played a big role in the rise in the gold price so far this year, and we expect it to continue”, Capital Economics analyst Simona Gambarini said.
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Wall Street stocks have ended little changed as investors kept to the sidelines ahead of Friday’s U.S. payrolls report for July.
Gold is sensitive to rising USA interest rates, which lift the opportunity cost of holding the non-yielding asset while boosting the dollar, in which it is priced.
For the week, the Aussie has gained 0.7 percent, showing resilience even after the Reserve Bank of Australia (RBA) cut interest rates to a record low 1.5 percent on Tuesday. Following the strong increase in June, a majority of economists are now expecting a weaker number with job growth around 180K as Wednesday’s ADP employment report showed signs of softness in the employment components of both ISM reports. Tokyo advanced 0.3 percent to 16,300.75 and Seoul’s Kospi rose 0.6 percent to 2,011.59.
The MSCI All-Country World index rose 0.4 percent, as did the pan-European STOXX 600 index, supported by a broad equity rally on Friday’s payrolls data and as Europe’s under-pressure banks extended gains from post stress-test lows.
STIMULUS IN THE UK: The Bank of England cut interest rates to new lows and unveiled a raft of stimulus measures that include resuming a bond-buying program to pump money into the economy and offering cheap loans to banks.
“Based on our analysis, the payroll growth in July is likely to be pretty strong. That should be positive for the dollar”.
Japan’s Nikkei, which earlier touched a near-four-week low on Thursday, rebounded to end the day up 1.1 per cent as the yen weakened.
Thursday meanwhile marked the first rate reduction since March 2009, when the bank cut to the previous historic low of 0.50 percent – and launched the radical QE policy to stimulate lending and growth during the global financial crisis.
Gold was also flat at $1,360.30 an ounce ahead of the payrolls report, heading for a 0.7 per cent gain for the week.
The Dow Jones industrial average fell 2.95 points, or 0.02 per cent, to 18,352.05, the S&P 500 gained 0.46 points, or 0.02 per cent, to 2,164.25 and the Nasdaq Composite added 6.51 points, or 0.13 per cent, to 5,166.25.
In commodities, oil pulled back slightly after rallying overnight following a modest stockpile drop at the USA delivery hub for crude futures.
Among other precious metals, silver was up 0.1 per cent at $US20.39, while platinum was up 0.1 per cent at $US1,160.
Brent crude, a benchmark for global oil prices, added 1.19 dollars (90p), or 2.8%, to 44.29 dollars (£33.79) a barrel in London. It previously predicted growth of 2.3% in 2017 and 2018.
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BNP’s Lynton-Brown thinks the market is underpricing the chances of a rate hike next month. Callaway climbed 42 cents, or 4 percent, to $11.
