Gold firms near lifetime high

Photo: AFP

SINGAPORE - Gold ticked up on Friday and held near of a lifetime high, but improving US and China data, which suggested growing global economic strength, could curb gains.

China's manufacturing sector gathered momentum in September, handily beating market forecasts and providing further evidence that the economy is pulling smoothly out of a second-quarter slowdown.

Silver held near a 30-year high, platinum rose to a four-month high to track gains on TOCOM platinum futures while industrial demand helped sister metal palladium stayed near its strongest level since early 2008.

Spot gold added $4.70 an ounce to $1,309.95 after hitting a record around $1,315 on Thursday, racking up its eighth consecutive quarterly gain as the US Federal Reserve appeared ready to pump more cash in the struggling economy.

"I guess speculation will still be rife as to the state of the US economy. The need or not for a QE2 (second round of quantitative easing) from the Fed," said Darren Heatchcote, head of trading at Investec Australia in Sydney.

"I think we can expect (gold) to remain volatile. Its movement has been determined by the US dollar at the moment."

But Thursday's data showed new US jobless claims fell last week, regional manufacturing grew faster than expected and consumer spending was slightly stronger than expected earlier in the year, injecting a little caution about the prospects for more quantitative easing from the Fed.

"If it stays above $1,305, I think the more medium-term target could be sort of $1,345," said Heathcote of Investec, who pegged downside target around $1,290s.

US gold futures for December delivery rose $1.6 an ounce to $1,311.2 an ounce, having struck a record at $1,317.50 on Thursday.

The euro edged up toward a five-month high on the US dollar on Friday and the Australian dollar gained after upbeat Chinese data encouraged a little risk-taking in the higher-yielding currency ahead of US indicators.

The world's largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings eased to 1,304.776 tons by Thursday from 1,305.688 tons on Tuesday. The holdings hit a record at 1,320.436 tons on June 29.

The physical sector noted selling from Indonesia and bargain hunting from Thai gold consumers, while dealers in Tokyo saw a bit of activity in Platinum Group Metals.

Higher gold prices widened the discounts for gold bars in Tokyo to 50 cents below the spot London price from 25 cents last week. China's financial markets are closed for a week from October 1 to 7 for the National Day holiday.

"There's a bit buying on TOCOM platinum, that's why spot price is increasing. But I don't see demand the industrial sector because the price is too high anyway," said a dealer in Tokyo.

"There's a bit of buying for palladium in Japan and also the other parts of Asia. That demand comes from the auto and dental industries."

Platinum and palladium are used in jewelry, autocatalysts and also in dentistry.

In other markets, The Nikkei pared gains sharply on Friday, weighed down by large-lot selling of futures and declines in banking shares, while oil rose above $80 a barrel, staying at a seven-week high.

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Asian shares sluggish on US nervousness, Japan woes

TOKYO - Asian stock markets were sluggish on Friday following a lackluster session on Wall Street and mixed economic data from Japan.

Tokyo's Nikkei index was down 0.87 percent, or 77.38 points, at 8.829.1 in the morning, Sydney's S&P/ASX 200 was down 0.20 percent at lunch, while Hong Kong and Shanghai were both flat in early trade, at 20,600.49 and 2,601.70 respectively.

Analysts said markets were reacting in large part to a tumble on Thursday on Wall Street, where traders were bracing for a sharp revision of US economic growth later on Friday and a speech by US Federal Reserve chief Ben Bernanke.

"Investors are growing increasingly concerned about the US economy and there are repercussions in the Japanese market," Naoki Fujiwara, fund manager at Shinkin Asset Management, told Dow Jones Newswires.

In New York the blue-chip Dow Jones Industrial Average closed below the sensitive 10,000 level for the first time in nearly two months, dropping 0.74 percent to 9,985.81. The broader S&P 500 index fell 0.77 percent and the Nasdaq 1.07 percent.

Compounding pessimism in Japan, data showed that deflation remained stubbornly entrenched in July, with the core consumer price index falling 1.1 percent from a year earlier, its 17th straight month of decline.

The consumer price data are likely to heighten doubts about the durability of Japan's recovery, which has come under pressure from the effects of a strong yen, feeding into tensions in the governing Democratic Party of Japan, where a leadership contest is under way.

In one bright spot, Japan's unemployment rate edged lower to 5.2 percent in July, its first fall in six months and a 0.1 percentage point drop from June.

Chinese stocks were dragged down by financial shares after disappointing results earlier in the week from insurance giant China Life, which was down 1.79 percent in early Hong Kong trade, adding to a fall on Thursday.

Bank of China was down 1.39 percent in Hong Kong after also disappointing with its first-half results.

Also contributing to Shanghai's limp start were comments Thursday by the head of the National Development and Reform Commission, Zhang Ping, reiterating that housing prices in some cities remained too high, suggesting no let up in measures to cool the market. No new steps were announced, however.

The dollar was range-bound against other currencies, fetching 84.34 yen in Tokyo morning trade, hardly changed from New York late Thursday.

The euro fell to $1.2693 from $1.2720 in New York and to 107.07 yen from 107.35 yen.

Oil prices dipped below $73 as concerns about weak US economic data pervaded crude markets, analysts said.

New York's main contract, light sweet crude for October delivery, fell 37 cents to $72.99 per barrel. Brent North Sea crude for delivery in October shed 33 cents to $74.69.

Gold opened at $1,235.80-$1,236.80 an ounce, down from Thursday's closing price of $1,241.50-$1,242.50.

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US woes weigh on Asian stock markets

HONG KONG - A fresh batch of disappointing figures from the US and losses on Wall Street sent Asian markets tumbling on Friday.

And the dollar remained under pressure from the yen amid uncertainty over the global outlook and as dealers awaited measures from Tokyo aimed at reining in the Japanese unit.

Tokyo's Nikkei fell 1.96 percent, or 183.30 points, to 9,179.38 as exporters were hit by the yen's stubborn strength. Sydney fell 1.07 percent, or 48.1 points, to 4,430.9 and Hong Kong lost 0.43 percent, or 90.64 points, to end at 20,981.82.

Shanghai was 1.70 percent off, shedding 45.67 points to finish on 2,642.31.

The US announced on Thursday a new set of data that stoked growing concerns about the recovery in the world's biggest economy amid fears of a double-dip recession.

The Labor Department said the number of Americans filing new weekly claims for jobless benefits jumped unexpectedly to 500,000, the highest in nine months and against forecasts of a small improvement.

It was the third straight week in which claims have risen, and underscores the threat posed by unemployment to the recovery. US unemployment hit 9.5 percent in July.

The glum figures were compounded after the Federal Reserve of Philadelphia said manufacturing activity in the mid-Atlantic region had dropped in August.

Wall Street reacted badly, with the Dow falling 1.39 percent and Nasdaq 1.66 percent off.

Thursday's announcements added to an already downbeat outlook for the US.

Already this month the Federal Reserve has forecast the economy will take longer to recover than originally expected, while manufacturing data have also disappointed.

The dollar remained under pressure as investors look for protection against risk by buying the yen.

The dollar, which hit a 15-year low of 84.73 yen last week, was at 85.28 yen in Tokyo afternoon trade, from 85.38 in New York Thursday.

Currency dealers have been waiting anxiously for measures by Japan to halt the yen's rise and give a much-needed fillip to the stuttering economy.

Bank of Japan chief Masaaki Shirakawa is due to meet Prime Minister Naoto Kan on Monday to discuss stimulus for the economy and ways to brake the yen's advances.

"We are hearing rumors that the BoJ may hold an emergency meeting," said Yuji Saito, forex analyst at Credit Agricole.

"Market players are looking to possible moves by the Bank of Japan," he said.

Shinichiro Matsushita, market analyst at Daiwa Securities, told Dow Jones Newswires: "The market is increasingly concerned about the yen's rise and has priced in hopes that the BOJ will have an emergency meeting soon."

The euro slipped to $1.2798 from $1.2821 and to 109.20 yen from 109.47 in New York.

Economic uncertainty led risk-averse dealers into safe haven gold, which opened at $1,231.00-$1,232.00 an ounce, up from Thursday's closing price of $1,229.50-$1,230.50.

Oil was higher, with New York's main contract, light sweet crude for delivery in September, up 14 cents to $74.57 a barrel in morning trade.

Brent North Sea crude for October delivery advanced 24 cents to $75.54.

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