Economy

Gold holds steady as Fed rate pause bets weigh on dollar

Gold holds steady as Fed rate pause bets weigh on dollar”

Technology and consumer discretionary shares led gains.

Despite Friday's stronger than expected U.S. December jobs data, many analysts believe the world's largest economy is losing momentum and further rate hikes are the last thing it needs.

Fed Chairman Jerome Powell said Friday that there is "no preset path" for interest rate hikes and the Fed has been patient and keeping a close eye on the voices of the financial market.

Yields on two-year Treasuries rose to 2.49 percent, from a trough of 2.37 percent, but were still below those on one-year paper.

The crude benchmark rose 54 cents on Monday to $57.61 a barrel, while US crude futures gained 53 cents to $48.49. "But now we are also seeing an increase in investor appetite, which is applying an upward pressure on the market, which is already tight", Cooper said. "I do think going forward you are probably not likely to see that type of move where equities sell off 20 percent in the space of six weeks, but generally volatility will be higher than what you saw in 2017 and the first half of 2018". Some traders even expect a rate cut in 2019, it added.

Trump in the final months of 2018 repeatedly attacked the Fed, blaming market volatility on the central bank's steady and gradual interest-rate increases and calling it the "only problem" for the USA economy. Apple Inc. last week cut its revenue outlook for the first time in nearly two decades, citing weakness in China's economy as one of the reasons.

Chinese officials also meet their USA counterparts for trade negotiations starting later Monday, the first face-to-face talks of the year. Oil extended its recent rebound to trade back above $48 a barrel.

The dollar weakened against its peers on Monday, as investors wagered that the Federal Reserve would put its policy tightening on pause in 2019, which eased market concerns about a slowing for USA growth. Powell will speak to the Economic Club of Washington D.C. on Thursday.

United States gold futures were also steady at $1,289.50 per ounce. The S&P 500 Index climbed 3.4 percent Friday, when the Dow Jones Industrial Average advanced 3.3 percent. MSCI's broadest index of Asia-Pacific shares outside Japan put on 1.3 percent.

The effect was apparent in the Australian dollar, which is often used as a liquid proxy for emerging markets and China risk.

The dollar lost 0.2 percent versus the offshore yuan to 6.8490.

On Monday's market closure, the American dollar had plunged against all of the seven major currencies, while Euro posted a gain of 0.71 percent against American dollar and the GBP rose 0.31 percent.

The Fed has raised interest rates by 2.25 percentage points since late 2015 as unemployment declined to below 4 percent.

Meanwhile, spot palladium - which broke through $1,300/oz on Friday to hit its highest on record at $1,310 - eased slightly, but was still trading at a slight premium to gold.



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