>>PRECIOUS-Gold hits 5-week high on view Fed will keep stimulus - RTRS >>GLOBAL MARKETS-Bonds and stocks drift ahead of Fed, Brent jumps - RTRS 28-Oct-2013 22:55 *Dollar pares gains after U.S. pending home sales data shows slump in September *Gold gains seen likely if Fed delays stimulus tapering *SPDR holdings fall 4.5 tonnes *Fed meeting could fuel more dollar selling *Brent oil climbs as Libya output drops (Updates prices, adds comment) By Clara Denina LONDON, Oct 28 (Reuters) - Gold hit a fresh five-week high on Monday after weak U.S. economic data buoyed investor belief that the U.S. Federal Reserve would stick with its bullion-friendly stimulus measures at a policy meeting later this week. Pending home sales slumped 5.6 percent in September, a rate that was far steeper than expected and the biggest drop in more than three years. The Federal Reserve starts its two-day policy meeting on Tuesday and is widely expected to keep its bond-buying stimulus unchanged at $85 billion per month. Most expect the central bank will delay withdrawing stimulus until March 2014. Spot gold XAU= hit a best since Sept. 20 at $1,361.60 an ounce after the data, and was up 0.6 percent at $1,360.01 by 1511 GMT. U.S. gold futures GCv1 for December delivery were up $8.00 an ounce at $1,360.40. Gold is very sensitive to the U.S. data because if more and more figures confirm that tapering will be delayed, that is positive for the U.S. Treasury market and negative for yields, Quantitative Commodity Research owner Peter Fertig said. The dollar .DXY held above a nine-month low against a basket of currencies, while U.S. Treasury yields US10YT=RR were little changed at 2.5 percent, well below a peak of 3.0 percent recorded at the beginning of September. Returns from U.S. bonds are closely watched by the gold market given that the metal pays no interest. Bullion has fallen nearly 20 percent this year on fears that the end of easy money from the U.S. central bank would dim the metals inflation-hedge appeal. In the past two weeks, however, gold has gained 7 percent as weak U.S. data and budget battles in Washington looked set to deter the Fed from scaling back asset purchases. BULLISH BETS As a gauge of investor sentiment, holdings in the worlds largest gold-backed exchange-traded fund, New Yorks SPDR Gold Shares GLD, fell 4.5 tonnes to 872.02 tonnes on Friday. GOL/ETF Hedge funds and money managers cut bullish bets in futures and options of U.S. gold markets for the week to Oct. 1, a report by the Commodity Futures Trading Commission showed. (Full Story) Traders were also monitoring physical demand in Asia, which has been subdued following a big rush earlier this year. Premiums in India jumped to a record high of $130 an ounce last week as government restrictions on gold imports squeezed supply during the peak holiday season. GOL/AS India, where gold is bought for weddings and festivals, celebrates Diwali and Dhanteras festivals in early November. There is little chance we shall see a pronounced buying revival given time constraints before the festival of light marks an end to the traditional pre-holiday bullion purchases by jewellers in the top consumer country, VTB Capital said. In China, premiums on the Shanghai Gold Exchange XAUTD=SGEX fell into negative territory. Premiums were as high as $30 in April-May. Spot silver XAG= rose 0.4 percent to $22.59 an ounce. Spot platinum XPT= was up 1.6 percent at $1,467.24 an ounce on prospects that strikes in South Africa could curb supply. (Full Story) Spot palladium XPD= was up 0.5 percent at $743.72 an ounce. NEW YORK, Oct 28 (Reuters) - An index of world shares ticked up and neared a six-year high while the U.S. dollar edged higher on Monday but stayed close to a nine-month low as expectations lingered that the Federal Reserve will keep its loose monetary policy in place this week. The Federal Open Market Committee, the Feds policy-making arm, is unlikely to make any shift to policy at its meeting on Tuesday and Wednesday as the Fed awaits more evidence of how badly Washingtons recent budget battle hurt the U.S. economy. Most riskier assets rose sharply last week as the uncertainty caused by the U.S. government shutdown and a mixed batch of economic data convinced many the Fed would delay any move to begin trimming its stimulus into next year. With the dollar trading near its lowest levels of the year against most major currencies, however, and the euro near a two-year high and many major global share indexes near record highs, investors were wary of pushing prices higher. It may turn out that a neutral FOMC is a green light to keep selling the dollar until November headline data begin appearing in early December, but there is already a lot of dovishness priced in, said Steven Englander, global head of foreign exchange strategy at CitiFX, a division of Citigroup in New York. The dollar index was up 0.2 percent at 79.35, not far from a near nine-month low of 78.998 touched on Friday. The euro dipped to $1.3782, having touched a high of $1.3833 late last week. The longer the Fed keeps its policy loose, the longer U.S. yields will stay low, making the dollar less attractive. U.S. stocks were little changed with the S&P 500 near the record set on Friday as traders awaited earnings from Apple AAPL.O due after the closing bell. In order for the ball to keep rolling on Wall Street, well need to know that the Feds stimulus will stay in place, giving us abundant liquidity, said Jack Ablin, chief investment officer at BMO Private Bank in Chicago. In the meantime, weve gone something like 500 days without a 10 percent correction, and at some point earnings will have to catch up with current valuations. The Dow Jones industrial average .DJI fell nearly 50 points or nearly 0.35 percent, to 15,547.67, the S&P 500 .SPX lost 9.06 points or 0.54 percent, to 1,758.71 and the Nasdaq Composite .IXIC dropped 13.722 points or 0.35 percent, to 3,929.639. MSCIs world equity index .MIWD00000PUS, which tracks share moves in 45 countries, was up 0.2 percent marking a fourth day of gains as it climbed back towards last weeks peak, last seen in January 2008. After opening in line with Asian markets gains, Europes main indexes had turned lower by midday, reflecting a more mixed set of corporate earnings announcements and the caution over the recent run up. The broad FTSEurofirst 300 index .FTEU3 was down 0.2 percent as it shed some of last weeks 0.6 percent gain which had taken the index to a five-year high. .EU MOST MARKETS ON FED WATCH The likelihood that Fed cash will keep flowing into the financial system for longer than many had anticipated supported gold and other metal markets, but after strong gains last week these markets were also wary of pushing much higher. Copper CMCU3 was also up 0.2 percent at $7,199 a ton. In the oil market, Brent crude rose above $108 a barrel after a new drop in Libyas oil exports revived supply concerns, while strong gains in U.S. industrial output boosted demand hopes. Brent rose 1.8 percent to $108.90 a barrel and U.S. crude added 0.2 percent to $98.08 a barrel. O/R U.S. Treasuries prices were little changed as investors prepared to make room for this weeks $96 billion in longer-dated government debt supply but a weak reading in U.S. pending home sales data gave prices support. Benchmark 10-year Treasury notes US10YT=RR traded down 1/32 in price with a yield of 2.507 percent. The 10-year yield touched a three-month low of 2.471 percent last week in the wake of disappointing September jobs figures. (Additional reporting by A. Ananthalakshmi in Singapore; Editing by David Evans, Keiron Henderson, and Globlex Holding)
Posted on: Mon, 28 Oct 2013 15:57:42 +0000
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