Gold prices gain in Asia on london Attacks, Qatar diplomatic row

Gold found support in Asia on Monday after a weekend attack in London that killed seven after a van mowed down pedestrians on London Bridge and attackers from the vehicle fanned out and started stabbing people at nearby restaurants and bars and mulled the potential fallout as key Gulf Countries and Egypt snapped diplomatic and commercial ties with Qatar over terrorism support charges.

Gold for June delivery rose 0.19% to $1,282.61 a troy ounce on the Comex division of the New York Mercantile Exchange.

Last week, gold prices rose to their highest level in over than a month on Friday after a disappointing U.S. employment report underlined the case for the Federal Reserve to continue raising rates at a gradual pace.

The U.S. economy added 138,000 jobs last month the Labor Department reported, falling far short of economists’ expectations for 185,000 new jobs.

Figures for March and April were also revised to show that 66,000 fewer jobs were created than expected, indicating that the labor market may be losing momentum.

The unemployment rate ticked down to a 16-year low of 4.3%.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell 0.57% to 96.61 late Friday. It was the lowest close since the U.S. presidential election on November 8, which sent the index soaring.

Gold and the dollar typically move in opposite directions, which means if the dollar goes down, gold futures, which are denominated in the U.S. currency, will rise.

Most analysts still believe the disappointing data will not stop the Federal Reserve from raising interest rates at its meeting later this month.

Traders now see a roughly 88% chance of a Fed rate increase on June 14, down slightly from 89% before the jobs report.

But the slowdown in jobs growth could temper expectations for a pick-up in economic growth in the second quarter after the economy expanded by just 1.2% year-over-year in the first quarter.

Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced.

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China iron ore falls 7% on high supply

chinese iron ore futures tumbled 7% on Wednesday, the steepest single-day drop in more than two weeks, on issues over plentiful provide as shares of the steel-making raw subject matter on the usa's ports rose to the absolute best in as a minimum 13 years.

Iron ore's decline was once the sharpest amongst China's commodity futures after Moody's buyers carrier downgraded the united states's long-time period local and foreign currency echange supplier scores, warning its monetary potential would erode in coming years as economic boom slows and debt continues to mount.

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Stronger global growth and commodity prices contribute to faster economic growth for Indonesia in 2017

Stronger global economic growth and continued gains in commodity prices are helping to drive up Indonesia’s economic growth forecast to 5.2 percent this year from 5.0 percent in 2016. Global policy uncertainty and fiscal dynamics pose downside risks, according to a new World Bank report released today.

The report says the fundamentals of the Indonesian economy remain strong, with robust economic growth, a low current account deficit and unemployment, a conservative government deficit and inflation at a record low. Double-digit real wage growth, accommodative monetary policy and higher commodity prices helped increase household consumption and investment and exports rebounded in the fourth quarter of 2016.

Staying the course on continued structural reforms is crucial to further enhance the economy’s potential growth, says the March 2017 edition of the Indonesia Economic Quarterly.

“Having achieved robust growth in 2016, the economic outlook for Indonesia remains on the positive side this year. With an increase in commodity prices, 2017 offers an opportunity for Indonesia to solidify its recovery and secure stronger growth in the longer-term. The country will continue benefitting from sustaining structural reforms in order to do so” said Rodrigo A.Chaves, World Bank Country Director for Indonesia.

The Bank projects inflation to be temporarily higher this year at 4.3 percent, up from 3.5 percent in 2016, due to hikes in electricity tariffs linked to better targeted public subsidies, and due to vehicle registration fees. The current account deficit is expected to remain at a five-year low of 1.8 percent of GDP, unchanged from 2016, on stronger commodity prices  Meanwhile, the central government budget deficit is projected to edge up to 2.6 percent of GDP, partly due to stronger public expenditures on investment.

The report includes a study on services trade in Indonesia. It says Indonesia should reduce restrictions on services trade to improve productivity and competitiveness. According to data from the Organization for Economic Cooperation and Development, Indonesia has some of the most restrictive barriers to services trade.  

“Trade restrictions on services weaken the quality of those services and are also impeding the productivity of other sectors of the economy, as services such as transport, distribution and electricity are key inputs for industrial production. Lifting these restrictions could therefore bring economy wide benefits.” said Hans Anand Beck, Acting Lead Economist.

The report also finds that the redesign of the Kredit Usaha Rakyat (KUR) program towards the provision of subsidized loans to micro, medium and small enterprises (MSMEs), has led to a 10-fold increase in the cost of the program. With more selective targeting, program costs could be much lower, and the savings could be redirected to other underfunded priority sectors in Indonesia.  There is a strong need to rethink the use of subsidized loans to support MSMEs.

The Australian government’s Department of Foreign Affairs and Trade supports the publication of the report.

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