Social networking can be good or bad for a blog for several different reasons. The first is what the "network" does to the blog. If it is like a lot of these so called social places on line then it is probably censored and blocked to the point of being ineffective. Not all social networking sites are like this but there are several that are. They have these "administrators" who god knows where that want to block everything to do with blogging. I have a term for these people. I call them haters. We all know that misery loves company and they are really seeking some company. Anyway what my point is is to tell you to experiment and find out which sites are good and work for you. The easy ones that everyone uses are linked in and twitter oh yeah don't forget about face book. You and the other 10 billion people can post what you want people to see. I am not saying not to use the big sites but just open you horizons to using some of the smaller networks as well. Hopefully you can avoid the haters. Don't forget to subscribe to my blog for more info and updates via Google plus or e-mail. Thanks.
Thursday, July 11, 2013
Indonesia reopens dollar market - desperation or savvy?
What is going on in Asia with the dollar? Why are they so hasty in selling bonds for quick cash? Do they know something we don't? I think they see something coming on the horizon when it comes to the dollar and it losing some value. Tell me what you think. Here is a good article from Reuters.
* Sovereign does first Asian dollar bond in a month
* Yield higher than necessary, argue bankers
* Haste may have been warranted
By Neha D'Silva
HONG KONG, July 11 (IFR) - As the Republic of Indonesia claimed the laurels of reopening the dollar bond market in Asia ex-Japan, it also raised questions as to why it was so eager to raise money from international investors. The sovereign sold a US$1bn bond maturing in October 2023 on Wednesday, just three months after selling US$3bn in dollar debt that comprised another 10-year bond and a 30-year bond.
The sovereign's quick return to the market with a new benchmark had many asset managers questioning if the country was not a bit desperate for cash. "Indonesia needs the cash to replenish their depleted reserves," said one portfolio manager.
With some US$98bn in reserves in June, Indonesia does not seem to be on the verge of running out of hard currency. But just one month prior to that, the Central Bank had US$105.2bn in its reserves, so the investor's speculation is not completely unfounded.
Indonesia, however, seems more to be using the bond market as a way to mitigate macroeconomic troubles and poor budget planning than just refilling hard currency reserves.
According to local brokerage Mandiri Securitas, the government has recently revised its budget deficit estimates for 2013 to 2.4% of GDP, versus its earlier projections of 1.6%. With some 20% of the funding needs to be met in foreign markets, that means Indonesia will have to issue some US$3.7bn more this year than it had initially planned, Mandiri said.
Moody's also noted in a research report last week that rising inflation, policy tightening, and lower prices for Indonesia's commodity exports could weigh on economic growth in 2013, though real GDP growth came in above 6% for the third consecutive year in 2012.
"Everyone knows that Indonesia needs the money," said a Hong Kong-based syndicate banker.
Indeed, some speculated that the choice of an October maturity for the new bond was a trick to allow it to be reopened later in the year.
Besides that, Indonesia is looking to raise money with an Islamic bond. "They are planning to do a dollar sukuk post-summer and they wanted to finish this deal before investors go off on summer holidays," said a banker close to the deal.
COSTLY SPEED
The trouble is that, in its haste to get money, the sovereign may have paid more than necessary.
In April, Indonesia sold a US$1.5bn 10-year bond with a 3.375% coupon, its lowest ever print in conventional format at that tenor. This time, the sovereign paid a coupon of 5.375%, which with a cash price of 99.391 translated into a yield of 5.45%.
Part of that difference is due to a 100bp increase in Treasury rates since Indonesia did its last deal and a 90bp increase in the sovereign's spread, the premium investors charge for buying Indonesian bonds instead of Treasuries.
But some argue that if Indonesia had waited only one day more it might have already gotten a better deal than it did. The secondary price of the sovereign's bonds rose over US$1.5 in their first day of trading, as credit markets rallied following dovish remarks by Fed Chairman Ben Bernanke.
Bankers not involved in the transaction said this suggests that if Indonesia had done its deal on Thursday instead of Wednesday it might have paid a yield of 5.2%, a difference that adds up to savings of US$25m over the life of the bond.
Bankers on the deal dismissed the criticism saying that it is "impossible to predict the future and what if Bernanke's comments were hawkish?"
For all the arguments made by bankers that Indonesia could have gotten a lower yield, investors suggest the sovereign may have actually been smart coming out as soon as possible.
"They just want to raise dollars while they can," said another portfolio manager. He noted that benchmark rates are still trending up and that looming elections as well as the deterioration of macroeconomic fundamentals mean the yields Indonesia pays are likely to go higher, not lower.
In the long run, a banker suggested, the sovereign may actually look smart for being in a hurry. (Reporting By Neha D'Silva; Editing by Christopher Langner)
Indonesia reopens dollar market - desperation or savvy?
* Yield higher than necessary, argue bankers
* Haste may have been warranted
By Neha D'Silva
HONG KONG, July 11 (IFR) - As the Republic of Indonesia claimed the laurels of reopening the dollar bond market in Asia ex-Japan, it also raised questions as to why it was so eager to raise money from international investors. The sovereign sold a US$1bn bond maturing in October 2023 on Wednesday, just three months after selling US$3bn in dollar debt that comprised another 10-year bond and a 30-year bond.
The sovereign's quick return to the market with a new benchmark had many asset managers questioning if the country was not a bit desperate for cash. "Indonesia needs the cash to replenish their depleted reserves," said one portfolio manager.
With some US$98bn in reserves in June, Indonesia does not seem to be on the verge of running out of hard currency. But just one month prior to that, the Central Bank had US$105.2bn in its reserves, so the investor's speculation is not completely unfounded.
Indonesia, however, seems more to be using the bond market as a way to mitigate macroeconomic troubles and poor budget planning than just refilling hard currency reserves.
According to local brokerage Mandiri Securitas, the government has recently revised its budget deficit estimates for 2013 to 2.4% of GDP, versus its earlier projections of 1.6%. With some 20% of the funding needs to be met in foreign markets, that means Indonesia will have to issue some US$3.7bn more this year than it had initially planned, Mandiri said.
Moody's also noted in a research report last week that rising inflation, policy tightening, and lower prices for Indonesia's commodity exports could weigh on economic growth in 2013, though real GDP growth came in above 6% for the third consecutive year in 2012.
"Everyone knows that Indonesia needs the money," said a Hong Kong-based syndicate banker.
Indeed, some speculated that the choice of an October maturity for the new bond was a trick to allow it to be reopened later in the year.
Besides that, Indonesia is looking to raise money with an Islamic bond. "They are planning to do a dollar sukuk post-summer and they wanted to finish this deal before investors go off on summer holidays," said a banker close to the deal.
COSTLY SPEED
The trouble is that, in its haste to get money, the sovereign may have paid more than necessary.
In April, Indonesia sold a US$1.5bn 10-year bond with a 3.375% coupon, its lowest ever print in conventional format at that tenor. This time, the sovereign paid a coupon of 5.375%, which with a cash price of 99.391 translated into a yield of 5.45%.
Part of that difference is due to a 100bp increase in Treasury rates since Indonesia did its last deal and a 90bp increase in the sovereign's spread, the premium investors charge for buying Indonesian bonds instead of Treasuries.
But some argue that if Indonesia had waited only one day more it might have already gotten a better deal than it did. The secondary price of the sovereign's bonds rose over US$1.5 in their first day of trading, as credit markets rallied following dovish remarks by Fed Chairman Ben Bernanke.
Bankers not involved in the transaction said this suggests that if Indonesia had done its deal on Thursday instead of Wednesday it might have paid a yield of 5.2%, a difference that adds up to savings of US$25m over the life of the bond.
Bankers on the deal dismissed the criticism saying that it is "impossible to predict the future and what if Bernanke's comments were hawkish?"
For all the arguments made by bankers that Indonesia could have gotten a lower yield, investors suggest the sovereign may have actually been smart coming out as soon as possible.
"They just want to raise dollars while they can," said another portfolio manager. He noted that benchmark rates are still trending up and that looming elections as well as the deterioration of macroeconomic fundamentals mean the yields Indonesia pays are likely to go higher, not lower.
In the long run, a banker suggested, the sovereign may actually look smart for being in a hurry. (Reporting By Neha D'Silva; Editing by Christopher Langner)
Shares, bonds rally, dollar tumbles after Fed cools taper talk!
I am starting to wonder about all of this "stimulus" the government is injecting to our economy. I cant help but think what are they stimulating the death of the dollar? The more we do this the more investors seem to loose confidence in our currency. Here is the story I read this morning from Reuters.
By Marc Jones
LONDON (Reuters) - Shares and bonds rallied globally on Thursday and
the dollar tumbled, after the head of the Federal Reserve signaled the
U.S. central bank may not be as close to winding down its stimulus
program as markets had started to believe.This came despite minutes showing half of Fed policymakers think the program should stop by the end of this year.
As investors cheered the prospect of ongoing support, risk assets performed strongly.
European bonds from Germany to Greece tracked gains in U.S. debt and European shares (.FTEU3) opened up almost 1 percent, pushing MSCI's world index <.miwo00000pus>, which tracks stocks in 45 countries, to its highest in almost a month.
"Bernanke's comments were taken by the markets as much more dovish so I suspect it will be a good day for risk markets and I don't expect that to change in the near term," said Saxo bank Chairman and senior market analyst, Nick Beecroft.
"We are still in a bit of a sweet spot for equity markets. The economy is doing well enough to encourage equity markets about future earnings, but not too hot to cause the Fed to remove accommodation."
The dollar (.DXY) tumbled 1.2 percent against a basket of major currencies while the euro roared to a three-week high of $1.32085 at one stage, though it was back at $1.3038 by 0720 GMT.
Copper prices gained 3.2 percent to exceed $7,000 a ton, hitting a three-week high and extending the previous session's 1.4 percent rise as the dollar softened.
Gold climbed 2.4 percent to a
three-week high and was on track for a fourth straight day of gains
while U.S. crude oil prices added 0.7 percent to their highest level
since March 2012, extending Wednesday's 2.9 percent jump.
(Editing by Susan Fenton)Tuesday, July 9, 2013
How the Mortgage Interest Deduction Could Change!
Does this mean they will void the interest deduction? Keep punishing the responsible people and rewarding the deadbeats... What do they think will happen? What do you think will happen? Let me know.
How the Mortgage Interest Deduction Could Change
By Mark Koba | CNBC – 7 hours ago
@cnbc on Twitter
View PhotoPeter Dazeley | Getty Images
House Ways and Means Committee Chairman Dave Camp (R-Mich) held tax reform hearings in April to eliminate loopholes. He said he's "carefully looking into revising" the popular provision that many in the real estate business consider crucial to the industry.
Camp said he'd like a total tax reform package before the year is out.
One analyst says the time is ripe to change the deduction-in existence since 1913- which is costing the U.S. government billions in tax revenue while doing little to help home ownership.
"It costs at least $70 billion a year in lost tax revenues," said Will Fischer, a senior policy analyst at the Center on Budget and Policy Priorities, and co-author of a study released last month that called for changing the mortgage interest deduction intto a tax credit.
"It only benefits about half of homeowners that pay interest," Fischer said. "I think there's real interest in reforming the mortgage interest deduction to help more people, while bringing in more tax revenue."
Right now, taxpayers who itemize their deductions can deduct up to $1 million of the interest paid on their mortgages, plus up to $100,000 of the interest on home equity loans, a type of loan in which borrowers use the equity in their home as collateral. Homeowners can do the same on a second home.
(Read more: End the Mortgage Interest Deduction? Expect a Fight)
In his paper, Fisher states that in 2012, 77 percent of the benefits from the mortgage interest deduction went to homeowners with incomes above $100,000. Close to half of homeowners with mortgages-mostly lower and middle-income families-received no benefit from the deduction, according to Fisher.
Only about 30 percent of eligible taxpayers actually use the mortgage interest deduction each year."And I've never had a deal happen or not happen because of the deduction," added Goldman, who is also a real estate broker.
Fischer's study points to several bipartisan panels that have looked into changing the deduction into a tax credit.
They include the Simpson-Bowles fiscal commission, as well as a tax reform group during the first term of president George W. Bush, and a debt reduction commission headed by former Democratic White House official Alice Rivlin and former New Mexico Republican Senator Pete Domenici.
(Read more: Rising Mortgage Rates Swing Housing Sentiment)
The various proposals would have a tax credit from a low of 12 percent to a high of 15 percent, without the need for taxpayers to itemize their returns. The proposals would limit the mortgage interest covered in the credit up to $500,000, or half of what it is now. All but one of the major proposals would eliminate the tax credit for a second home.
"A tax credit is a much fairer way to help homeowners, especially those that need it, like lower income families," argued Fisher.
But some heavy hitters in housing say changing the deduction in any way is unthinkable.
The powerful real estate lobby has played a crucial role in keeping the mortgage interest deduction intact, spending more than $80 million in lobbying Congress in 2012 alone in order to advance their causes.
"We think it should stay exactly the way it is," said J.P. Delmore, a lobbyist for the National Association of Home Builders.
"The deduction helps promote home ownership and we're against any changes into a tax credit," Delmore said. "Eliminating it would really be a tax hike on homeowners."
"There are winners and losers in every scenario but there would be more losers with a tax credit,"said Robert Dietz, chief economist at the NAHB.
"Home prices would likely come down if there is no deduction, as there would be fewer buyers," he said.
The National Association of Realtors said in a statement that, "Home prices, particularly in high cost areas, could decline 15 percent if recommendations to convert the mortgage interest deduction to a tax credit are implemented."
"The deduction means more to people than a credit," said said Johnny Martinelli, an associate real estate broker at Don Cies Real Estate in Norman, Oklahoma.
"Especially for first-time home buyers who may more interest at first than someone who's been in there home a long time and are paying more principle than interest," he said.
"It's a nice benefit to have when thinking about buying a home," Martinelli added.
Proponents of killing the mortgage interest deduction point to Canada and Great Britain as examples of how it could work.
Canadian federal income tax does not allow a deduction from taxable income for interest on loans secured by the taxpayer's personal residence. Homeownership in Canada rose to a high of more than 69 percent in 2012.
(Read more: Home Builder Sales at Risk Due to Rising Mortgage Rates )
Great Britain phased out the deduction starting in the 1980's and ended it completely in 2000.
Home ownership in England will slump to just 63.8 percent over the next decade, down from 72.1 percent in 2001, according to studies . Reasons for the fall include the need for huge deposits, combined with high house prices and strict lending criteria.
"Your're seeing how the lack of a deduction is affecting first-time home ownership in Britain," said Delmore of the NAHB. "The average age for first-time homeowners is getting older. It's up from 31 to 38. It shows how important the deduction is for those first timers."
More hearings on tax reform are scheduled through the summer and autumn, but forces attempting to enact mortgage deduction reform in Congress and the White House won't find it easy going.
Representative Sander Levin, the top Democrat on the House and Ways Committee, said he is "wary of eliminating the tax break for second homes." He told reporters that many residents of his district in central and northern Michigan have "small second homes" elsewhere in the state.
Fellow committee member Rep. Linda Sanchez, (D-CA) said she wants to make sure changes won't make it more difficult for working-class families to afford a home.
"I'm a little bit skeptical of changes to the tax code that would have the effect of putting that goal out of reach," she said to reporters after the June hearings.
For his part, President Obama has proposed ending the deduction for people above the 28 percent income tax bracket. That would mean that a homeowner in the top tax bracket with $10,000 in mortgage interest would receive a tax break of $2,800, as opposed to the $3,960 they currently get.
"You can't say for sure what will happen in Congress, but I think there's a lot of momentum to finally change the mortgage interest deduction," said Fischer. "When you look at all the ideas for tax reform, this one stands out for action."
Saturday, July 6, 2013
Jobless About to Take a Hit From Sequester!!!
By Jeff Cox | CNBC – 14 hours ago
The 11.7 million Americans still
unemployed are finding their wallets getting even lighter as the
sequester federal spending cuts kick in.
While the mandated
decreases have been slow to trickle into the real economy, the
unemployed are feeling perhaps the first big jolt. As of July 1, the average weekly benefit of $289 will fall by $43 a week, adding pressure at a time when the labor market is trying to find its bearings but has yet to generate the kind of employment that would indicate a strong recovery.
(Read More: Job Growth Posts Large Gain in June; Rate Holds )
Sharon MacGregor,
a 43-year-old graphic designer by trade, lost her job about a year ago
when the medical education company she worked for went under. Since
then, she's struggled to find work and now has to contend with even less
unemployment compensation.
"It's horrible, I never thought it would be like this when I got let
go," she said. "I've been laid off before and found a job in a couple of
months. I thought I'd be fine."
MacGregor
joins the ranks of 120,100 unemployment insurance recipients in New
Jersey who will see their average compensation drop 22.2 percent,
according to the National Employment Law Project.
The current typical unemployment insurance check for the Garden State runs $382, but will be reduced by $85.
As she traverses the rough unemployment
terrain, MacGregor finds herself bartering for services at the hair and
nail salon and counting on her Christian faith to get her through.
"I believe in God. I'm keeping my patience. For me, that's how I get by," she said. "Something definitely needs to be done." The cuts have come about as Congress debates how to handle the spending cuts mandated after it failed to reach a deficit-reduction deal last year.
(Read More: Jobs Picture Improves-but Not in Manufacturing )
While the spending pullback has helped reduce the national budget deficit and has had only incremental effect on first-half growth, economists worry that the full effect will be felt in the final six months of the year.
"They just don't care. The government is doing absolutely nothing to stimulate job growth," MacGregor said. "They've just swept this under the carpet."
Some of the sequester effects on jobs appear to have turned up in the June non-farm payrolls report, which showed the economy added 195,000 jobs while the unemployment rate held at 7.6 percent.
During the month, the number of workers holding part-time jobs for economic reasons swelled by 322,000 to the highest level since October.
How that plays out nationally likely will depend on location.
(Read More: White House Hails Jobs Report, GOP Finds Flaws )
New Jersey and Maryland led the pack of states cutting back on benefits at 22.2 percent each, followed by Montana (19.6 percent), Connecticut (19.2 percent), and Arizona and Illinois, both at 16.8 percent.
In states where the jobs picture is more robust, the cuts are lower.
Texas,
for instance, is reducing its typical benefit by 10.2 percent. The
state has a 6.5 percent jobless rate-well below the national level-and
has 118,500 on unemployment insurance.
Jordan Douglas was one of those who relied on the benefit program while studying to get her licensed vocational nursing degree.
Douglas, 25 and a single mother living in the small panhandle city of
Pampa, lost her nursing job in February 2012 and how has three
positions-one full-time and two part-time jobs she has thanks to a big
demand in her field. (Slideshow: 12 Jobs Where Women Win on Gender Pay )
"It's awesome and I couldn't have done it without unemployment,"
she said. "I literally got unemployment all the way up until April and I
graduated in May. There just would have been no way I could have made
it."
For the jobless about to feel the sting of benefit cuts, then, Douglas' story at least provides some hope. "I don't know if it was the economy last year or what. Now that I have a different degree it was a littler easier to find a job," she said. "I got my first check and it was double for two weeks what I made in a month. It feels pretty good."
_ By CNBC's Jeff Cox. Follow him @JeffCoxCNBCcom on Twitter.
Wall St. gains as jobs data signals stronger economy!!!
By Angela Moon
NEW YORK (Reuters) - Stocks rose sharply on Friday after robust jobs
data pointed to economic growth and investors overcame concerns that
the Federal Reserve may begin scaling back its stimulus efforts as soon
as September.After choppy trading through much of the session, which was marked by light volume, stocks extended gains in late afternoon, pushing the benchmark S&P 500 index (^GSPC) to close above the its 50-day moving average for the first time since June 19.
The government's report on non-farm payrolls showed employers added 195,000 jobs in June, exceeding expectations of 165,000. Job growth in previous months also was revised higher.
For the holiday-shortened week, the Dow rose 1.5 percent, the S&P 500 was up 1.6 percent and the Nasdaq composite advanced 2.2 percent.
At first some investors saw the jobs data as increasing chances the Fed would cut its stimulus efforts sooner than expected. But the market recovered smartly as investors took the view that the data was a positive sign for the economy, with sectors tied to the pace of growth leading the way upward.
Whether the jobs report "will stop the FOMC from the onset of its tapering process remains to be seen. However, we are trying, at the suggestion of the Federal Reserve, to ignore the latest single data point" and take a longer view about the economy, said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co in New York.
The Dow Jones industrial average (^DJI) was up 147.29 points, or 0.98 percent, at 15,135.84. The Standard & Poor's 500 Index (^GSPC) was up 16.48 points, or 1.02 percent, at 1,631.89. The Nasdaq Composite Index (^IXIC) was up 35.71 points, or 1.04 percent, at 3,479.38.
Small-cap shares and banks rallied, giving credence to the idea that investors were viewing the strong payroll figures positively.
The S&P Small Cap 600 index (.SPCY) rose 1.5 percent to hit a new all-time high of 568.15 while the S&P 500 financial sector index (CME:^SPSY) gained 1.8 percent.
"The jobs report this morning is a sign that the economy is growing and the private sector is hiring, and that bodes well for growth-oriented industries," said Janna Sampson, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois.
Bank of America Corp (BAC) rose 1.8 percent to $13.06 while Citigroup Inc (NYS:C) gained 1.8 percent to $48.53. Large banks benefit when interest rates rise because higher rates increase their net interest margin.
Interest rates rose sharply on Friday in anticipation that the Fed will start cutting its monthly $85 billion in bond buying, which was a major factor in the stock market's rally this year, as early as September.
Volume was light, with many traders still away after the Independence Day holiday on Thursday. About 4.9 billion shares changed hands on U.S. exchanges, compared to a daily average of about 6.4 billion shares this year.
Annaly Capital Management (NLY), a real estate investment trust that invests in mortgage-backed securities, slid 5.1 percent to $11.51 as the yield on the benchmark 10-year U.S. Treasury note jumped above 2.7 percent. Annaly Capital was the fourth most-traded stock on the New York Stock Exchange.
Gold tumbled 3 percent, extending earlier losses as the dollar gained strength. Newmont Mining (NEM.N) was the S&P 500's worst performer, falling 4.3 percent to $27.78.
On the NYSE, advancers beat decliners 1,708 to 1,309 while on the Nasdaq, advancers outperformed decliners 1,815 to 662.
(Reporting by Angela Moon; Editing by Kenneth Barry)Friday, July 5, 2013
Gold Tumbles as Market Speculates Anew on Fed Taper!!!
Gold Tumbles as Market Speculates Anew on Fed Taper
By: CNBC With Reuters
Getty Images
Gold was battered anew on Friday,
dropping more two percent on the day after U.S. jobs data fanned
speculation that the Federal Reserve's stimulus tapering might come
sooner rather than later.
Unemployment steadied at 7.6 percent for the month, as nonfarm payrolls grew by 195,000, according to a closely watched Labor Department report Friday. Economists expected 165,000 more jobs and a decline in the unemployment rate to 7.5 percent.
Speculation over the direction of Fed policy has been feverish. The better-than-expected jobs figures prompted bullion traders to sell precious metals in anticipation of an eventual end to the central bank's $85 billion monthly bond purchases — the prospects of which has already triggered turbulence across major asset classes worldwide.
(Read More: Europe Closes Higher on ECB, BoE Guidance)
Gold posted its biggest quarterly loss on record, down 23 percent in the April-June period. Selling was exacerbated by comments from Fed Chairman Ben Bernanke last month that the U.S. economy was recovering strongly enough for the central bank to begin tapering in the next few months.
That would support a rise in interest rates, making gold less attractive.
"We have a forecast for a strong non-farm number (180,000) and if we prove right on that there could be some further downside in store for gold, because that would suggest that although rates are set to stay at record lows in Europe, that may not be the case in the United States," Danske Bank analyst Christin Tuxen said.
(Read More: Gartman's 'Watershed' Shift on Gold)
Spot gold dropped 2.5 percent to $1,221 an ounce this morning. U.S.gold futures for August were down $30 at $1,221.
The metal posted a 5 percent drop last week, when it fell to its lowest since August 2010 at $1,180.71. It then staged a rebound, helped by traders forced to cover short positions at the beginning of the week.
Unemployment steadied at 7.6 percent for the month, as nonfarm payrolls grew by 195,000, according to a closely watched Labor Department report Friday. Economists expected 165,000 more jobs and a decline in the unemployment rate to 7.5 percent.
Speculation over the direction of Fed policy has been feverish. The better-than-expected jobs figures prompted bullion traders to sell precious metals in anticipation of an eventual end to the central bank's $85 billion monthly bond purchases — the prospects of which has already triggered turbulence across major asset classes worldwide.
(Read More: Europe Closes Higher on ECB, BoE Guidance)
Gold posted its biggest quarterly loss on record, down 23 percent in the April-June period. Selling was exacerbated by comments from Fed Chairman Ben Bernanke last month that the U.S. economy was recovering strongly enough for the central bank to begin tapering in the next few months.
That would support a rise in interest rates, making gold less attractive.
"We have a forecast for a strong non-farm number (180,000) and if we prove right on that there could be some further downside in store for gold, because that would suggest that although rates are set to stay at record lows in Europe, that may not be the case in the United States," Danske Bank analyst Christin Tuxen said.
(Read More: Gartman's 'Watershed' Shift on Gold)
Spot gold dropped 2.5 percent to $1,221 an ounce this morning. U.S.gold futures for August were down $30 at $1,221.
The metal posted a 5 percent drop last week, when it fell to its lowest since August 2010 at $1,180.71. It then staged a rebound, helped by traders forced to cover short positions at the beginning of the week.
The Two Sides of Gold: Bull vs. Bear
Mark Keenan, Cross Commodity
Research Strategist at Societe Generale and Anthem Blanchard, CEO,
Anthem Vault discuss their outlooks for the precious metal.
The dollar
rose nearly 1.5 percent against a basket of major currencies, bolstered
by weakness in the euro after the European Central Bank and Bank of
England said interest rates would stay low for an extended period.
After leaving its key interest rates unchanged on Thursday, the ECB said it may yet cut them further, responding to turbulence caused by the Fed's exit plan.
In other markets, the benchmark 10-year U.S. Treasury yield rose above 2.5 percent.
As gold pays no interest, the rise in returns from U.S. bonds and other markets is seen as negative for the metal.
After leaving its key interest rates unchanged on Thursday, the ECB said it may yet cut them further, responding to turbulence caused by the Fed's exit plan.
In other markets, the benchmark 10-year U.S. Treasury yield rose above 2.5 percent.
As gold pays no interest, the rise in returns from U.S. bonds and other markets is seen as negative for the metal.
Under Pressure
| Name | Price | Change | %Change | Volume | ||
|---|---|---|---|---|---|---|
| GOLD | Gold | 1213.20 | | -38.70 | -3.09% | 154359 |
| GOLD/USD | Gold / US Dollar Spot | 1210.70 | | -38.49 | -3.08% | --- |
| SILV/USD | Silver / US Dollar Spot | 18.80 | | -0.71 | -3.64% | --- |
| SILVER | Silver | 18.74 | | -0.96 | -4.87% | 37033 |
| PALL/USD | Palladium / US Dollar Spot | 667.75 | | -6.75 | -1.00% | --- |
| PLAT/USD | Platinum / US Dollar Spot | 1308.25 | | -30.25 | -2.26% | --- |
Rapid
outflows from gold exchange-traded products (ETPs) and
softer-than-expected physical demand were also keeping gold prices under
pressure.
(Read More: Brighter Jobs Picture to Tip Fed Taper?)
Gold ETPs holdings fell by $4.1 billion in June and $28.2 billion year-to-date, according to data from BlackRock.
Indian consumption has fallen since the government imposed new import restrictions, while Chinese buyers are waiting on the sidelines for prices to fall further, or at least stabilize.
"Chinese premiums are holding up and we expect them to be strong buyers if we get a dip back below $1,200," ANZ analyst Victor Thianpiriya said.
Silver fell 2.6 percent to $19 an ounce. Platinum was down 0.2 percent to $1,335 an ounce and palladium dropped one percent to $668 an ounce.
(Read More: Brighter Jobs Picture to Tip Fed Taper?)
Gold ETPs holdings fell by $4.1 billion in June and $28.2 billion year-to-date, according to data from BlackRock.
Indian consumption has fallen since the government imposed new import restrictions, while Chinese buyers are waiting on the sidelines for prices to fall further, or at least stabilize.
"Chinese premiums are holding up and we expect them to be strong buyers if we get a dip back below $1,200," ANZ analyst Victor Thianpiriya said.
Silver fell 2.6 percent to $19 an ounce. Platinum was down 0.2 percent to $1,335 an ounce and palladium dropped one percent to $668 an ounce.
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