🐂 Not all bull runs are created equal. November’s AI picks include 5 stocks up +20% eachUnlock Stocks

GLOBAL MARKETS-Weak dollar spurs gold to fresh high, shares slip

Published 11/12/2009, 02:37 AM
Updated 11/12/2009, 02:39 AM
GC
-
CL
-
PL
-

* Gold hits fresh record as dollar hovers near 15-month low

* Shares pull back as light profit taking emerges

* Aussie dollar surges to 15-mth high on strong jobs data

By Susan Fenton

HONG KONG, Nov 12 (Reuters) - Gold rose above $1,120 an ounce to a fresh record high on Thursday as the U.S. dollar wavered near 15-month lows, while Asian shares lost ground as investors took profits after four days of gains.

Financial spreadbetters expected British <.FTSE> and French shares <.FCHI> to follow Asian markets lower but saw a higher opening for Germany's DAX share index <.GDAXI>. U.S. equity futures slipped 0.4 percent.

The dollar <.DXY> fell to a 15-month low in early trade before recouping some losses, but was still down 0.2 percent against a basket of major currencies by midafternoon.

Its weakness encouraged a further shift by investors into gold , which hit a record high for a second day, rising around 0.4 percent to $1,120.30 an ounce, while platinum rose to a record high above $1,376 an ounce.

Bullion has recorded successive record highs for six out of the past eight sessions due to persistent dollar weakness, fears of a resurgence in inflation and hopes for more central bank gold buying.

Sterling also remained under pressure after the Bank of England on Wednesday explicitly called for currency weakness to boost exports and on benign UK inflation data. [ID:nLB169687] Sterling was trading at $1.6569, after falling more than 1 percent the previous day.

Asian shares surrendered early gains, showing some signs of fatigue as a massive rally extends into its ninth month.

The MSCI index of Asia Pacific stocks traded outside Japan <.MIAPJ0000PUS> was down 0.3 percent in late trade, snapping a four-day winning streak, but has still more than doubled from March lows and is near a 15-month high hit in October.

Hong Kong stocks <.HSI> fell 0.9 percent as profit taking set in. Japan's Nikkei <.N225> index also gave up early gains and closed 0.7 percent lower.

"The market lacked strength for further gains and consolidation is needed for the market to take a breather," said Ben Kwong, chief operating officer at KGI Asia in Hong Kong.

Analysts however, said profit taking could be limited as investors still seem to have an appetite for risk, reflected by the flight out of the weak dollar into higher-yielding assets.

A string of robust economic data from China on Wednesday has added to expectations the world's fastest-growing major economy can lead a pick-up in global activity, while a report on Thursday showed U.S. home foreclosure filings slowed for a third straight month in October. [ID:nNYS007524]

U.S. President Barack Obama was due to make a statement on job creation and the economic recovery later in the day at 1425 GMT.

ASIA CURRENCIES REMAIN FIRM

Australia's equity market <.AXJO> dipped 0.2 percent after strong employment data for October raised the likelihood of another interest rate rise next month.

That along with firmer prices for gold and other commodities propelled the high-yielding Aussie dollar to a 15-month high of $0.9370.

"One month of this data you can take with a grain of salt, but two months in a row of positive (employment) numbers is starting to look like a trend," said Rob Henderson, head of market economics at National Australia Bank.

Asian currencies are also expected to continue to face upward pressure after China signalled on Wednesday it was ready to renew yuan appreciation after an 18-month hiatus. Some analysts however, worry further regional currency appreciation could make its exports less competitive and impede economic recovery. [ID:nSP466424]

The yuan rose slightly against the dollar on Thursday in benchmark offshore one-year non-deliverable forwards.

Korean authorities were spotted intervening to curb the won , which was quoted at 1,156 to the dollar, up from 1,157 late on Wednesday.

South Korea's central bank said recent economic activity showed "clear recovery" but added it would maintain policy easing for the time being [ID:nSEL002745] and kept its benchmark interest rate unchanged at a record low 2 percent.

Korean bond futures were up 0.2 percent in late trade as the central bank's comments were seen dampening expectations for a rate rise in the first quarter.

Korean shares were down 1.4 percent but business group Hyosung <004800.KS> rallied 15 percent after the company withdrew its bid for a controlling stake in Hynix Semiconductor <000660.KS>, the world's No. 2 memory chipmaker. [ID:SEO373331]

Hynix shares were down 0.5 percent.

Shares in PT Adaro Energy , Indonesia's largest coal miner by market value, jumped as much as 7 percent following news that the stock will be included in the MSCI Indonesia Index with effect from Nov. 30.

U.S. crude oil futures held steady above $79 a barrel, with the market awaiting the release of government data on crude and refined oil product stocks and other economic indicators due out later in the day for directional cues. (Additional reporting by Bill Tarrant in SINGAPORE and Wayne Cole in SYDNEY; Editing by Kim Coghill) (susan.fenton@thomsonreuters.com; +852 2843 6367; Reuters Messaging: susan.fenton.thomsonreuters.com@reuters.net)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.