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Gold gains in Asia on Fed views, markets thin with China shut

Published 02/07/2016, 07:19 PM
Updated 02/07/2016, 07:20 PM
Gold gains in thin Asia trade

Gold gains in thin Asia trade

Investing.com - Gold prices gained in Asia on Monday as investors continued to see hesitation by the Federal Reserve to raise rates and in thin trade with China markets shut for the week.

Gold for April delivery on the Comex division of the New York Mercantile Exchange rose 0.71% to $1,165.80 a troy ounce.

Silver futures on the Comex gained 0.93% to $14.915 a troy ounce, while copper futures eased 0.15% to $2.087 a pound.

In the week ahead, investors will be looking to Wednesday’s testimony by Fed Chair Janet Yellen and Friday’s data on U.S. retail sales for further indications on the strength of the world’s largest economy.

Friday’s preliminary report on euro zone fourth quarter growth will also be closely watched amid heightened expectations for more easing by the European Central Bank in the coming months.

China markets are shut for the Lunar New Year holiday.

Last week, gold futures ended higher on Friday, following the release of a mixed U.S. employment report for January, with the rate of job creation slowing but wage growth accelerating.

The U.S. Department of Labor reported that average hourly earnings rose 0.5% last month and were up 2.5% on a year-over-year basis.

The economy created 151,000 jobs last month, the lowest number since September and less than the 190,000 forecast by economists’.

Despite the slowdown in jobs growth the unemployment rate fell to 4.9%, the lowest level since February 2008.

The pick-up in wage growth bolstered the outlook for inflation and increased the likelihood that the Federal Reserve could raise interest rates this year.
The dollar index rose to 96.98 late Friday, off three-and-a-half month lows hit earlier in the session.

Higher interest rates make the dollar more attractive to yield-seeking investors. A stronger dollar tends to weigh on gold, which is denominated in the U.S. currency and becomes more expensive for many buyers when the dollar rises.

Gold’s gains since the start of the year have been underpinned by concerns over a slowdown in global growth, heightened market volatility and more recently by weakness in the dollar, all of which fueled increased safe-haven demand.

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