Aussie reaches 2-year high on USA weakness

Aussie reaches 2-year high on USA weakness

The Australian dollar closed at its highest level for more than 2 years overnight Friday of 78.38 United States cents, boosted by weak data in the USA which has cast doubt on the Fed's current interest rate policy. Prices have been posting gains since a solid U.S.jobs report issued late last week, which backed the argument for higher interest rates although likely not at a more aggressive pace than the go-slow approach the Fed has signaled.

Spot gold gained 0.96 per cent at US$1,228.61 per ounce by 3:01pm EDT (1901 GMT) after hitting US$1,232.76. "That sent the US dollar lower alongside Treasury bond yields TMUBMUSD10Y, -0.14%, boosting the appeal of anti-fiat and non-interest-bearing assets". It was poised for a weekly gain of 1.3 per cent, the biggest since mid-May.

After Yellen's initial testimony, said Goldman, they see "a 10% probability (vs. 20% previously) that the next rate hike comes in September, 5% in November and 55% (vs. 50% previously) in December".

He said that, if USA inflation fails to rebound and the Fed says it will not raise rates this year, the Aussie dollar could soar even higher.

Friday's "data reaffirms the delay", he said. USA gold futures for August delivery rose 0.24 percent to $1,230.50 per ounce.

Van ECK Associates Corp Increases Stake in Valero Energy Corporation (VLO)
Norges Bank bought a new position in shares of Valero Energy Corporation during the fourth quarter valued at about $370,542,000. Moreover, Schwab Charles Investment Mngmt has 0% invested in Western Asset Mortgage Capital Corp (NYSE:WMC) for 283,988 shares.

Narrow ranges prevailed ahead of the U.S. open on Friday with bears unable to make any further impression on prices with a gradual advance to the $1,220 area.

A stronger greenback would weigh on gold, making the dollar-priced commodity more expensive for investors holding other currencies. "In order to turn neutral again we need to move back above that level", he said.

In silver, there was a sharp split between funds, which had largely sold off their record long position, and ETF investors, who had been recently buying, Hansen said.

Palladium advanced 0.4 percent to $855.49 per ounce, set to end the week nearly 2 percent higher. Platinum rose 1.68 per cent at US$916.65 per ounce, set to end the week up 1.5 per cent.

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