Hong Kong gold prices rebounded from earlier losses Friday and opened
sharply higher at $735.60-736.10/oz, compared with Thursday's close of
$725.60-726.10/oz. Local traders said gold in Asia took its cue from the
higher New York close on Thursday of around $737.50/oz.
The US Dollar Index dropped 23.9 points on Thursday following the release
of August factory orders by the Department of Commerce, which fell 3.3%, the
lowest level since January 2007.
"The greenback loses market momentum and moves down again and this has
prompted more fund players to return to the precious metals market," one local
trader said. He added that market players are now waiting for market
direction, watching the US non-farm payroll data for September to be released
in the US on Friday.
"We will have to see how the US dollar will react to the the employment
figures," the trader said. "For the moment, I see gold prices continuing to
receive strong support at $720-740/oz. Quite a lot of market players keep
holding their long positions, as the market sentiment is still bullish," he
added.
Another trader agreed that the renewed weakness in the US dollar was the
factor driving up gold prices. "Prices were down on Thursday mainly due to
a technical correction, but fund players will soon return to the gold market
spurred by a weaker US dollar," he said.
Meanwhile, gold futures contracts trading on the Tokyo Commodity Exchange
moved higher on Friday, following stronger US prices. The most actively traded
far forward August 2008 standard gold contract closed the morning session on
Friday at Yen 2,783 ($23.90)/g, up Yen 35 from Thursday's close.