Gold nears 11 month high; eyes US jobs report
London, October 3, 2012
Gold rose on Wednesday, with prices just shy of recent 11 month highs, as investors awaited a US employment report for signs of recovery in the world's biggest economy.
Spot gold was 0.3 per cent higher at $1,778.50 an ounce by 1022 G MT. Trade was thin as China, the world's largest commodity consumer, remained on a week-long holiday.
Prices hit $1,779.20 earlier this week, their highest since last November. US gold futures for December delivery were up 0.3 per cent at $1,781.00 per ounce.
"Gold has certainly got a bit of spring in its step at end of the summer break. There is good physical buying coming through and central bank buying is firm so the market will support it," said Ross Norman, chief executive at gold-broking firm Sharps Pixley.
The dollar was broadly firmer against a basket of major currencies. A stronger greenback usually weighs on commodities priced in dollars, yet gold still held near its highest levels for the year.
Expectations of further action from central banks to keep monetary policy accommodative were raised after data from China and Australia showed greater weakness in those economies.
Analysts said the US ADP report on private sector employment expected later on Wednesday had potential to move gold prices, after the Federal Reserve said last month that its $40 billion bond-buying programme would only be stopped when a sustained improvement in the job market was observed.
Investors are waiting for a broader survey of employment from the US government on Friday, which is expected to show 113,000 workers were added to non-farm payrolls in September, following the 96,000-increase in August.
Economists polled by Reuters expected the ADP report to show that private firms had added 143,000 workers in September, down from 201,000 in the previous month.
"We've seen intra-day moves triggered by the ADP numbers before so it wouldn't be a surprise if there was a bit of intra-day volatility around that number," Tom Kendall a Credit Suisse analyst said.
However, Kendall said the job data may not be enough to push prices above $1,800 an ounce, a figure seen as the next upside target.
"To get this market over $1,800 and trending higher again what we need to see is greater participation in places like India on the buy-side, which we've still not really seen in any sustained form," Kendall said.
Gold importers in India, the world's largest consumer of gold, stayed on the sidelines as an inauspicious buying period that lasts until late October got underway, local dealers said.
Benchmark Indian gold futures price held near its lowest in a month, trading at around 31,016 rupees per 10 grams.
Silver, having hit seven-month highs on Monday, was last up 0.4 per cent on the day at $34.73 an ounce.
The gold/silver ratio, which indicates the number of ounces of silver needed to buy one ounce of gold, eased on Wednesday to just above 51, heading towards its lowest since mid-September as silver continued to outperform gold.
Among platinum group metals, industrial unrest gripping South Africa's platinum sector failed to support prices. Spot platimum rose just 0.1 per cent to $1,671.24 an ounce.
Anglo American Platinum warned on Tuesday that security had worsened at its Rustenburg mines after several thousand workers rallied over pay.
Palladium fell 0.3 per cent to $645.30 an ounce, failing to draw strength from data late on Tuesday that showed a sharp rise in US vehicle sales in September.
The US car market, the world's second largest after China, is a key source of demand for the metal, which is used in the catalytic converters of gasoline-powered vehicles to clean noxious exhaust fumes.
US sales posted their best showing in 4-1/2 years in September, helped by cheap financing, rising consumer confidence and a major rebound by Toyota Motor Corp. – Reuters