Gold Edges Higher As Dollar Slips

U.S. Federal Reserve Chairman Jerome Powell speaks at the American Economic Association  Allied Social Science Association 2019 meeting in Atlanta

Fed Chairman Jerome Powell said Friday that there is "no preset path" for interest rate hikes and the Fed has been patient and keeping a close eye on the voices of the financial market. Japan's Nikkei reversed Friday's plunge to gain 2.4 percent.

Asian shares sped ahead on Monday as a dovish turn by the Federal Reserve and startlingly strong U.S.jobs data soothed some of the market's worst fears about the global outlook.

"The Fed is listening to the market and has acknowledged flashing market signs", said Sim Moh Siong, currency strategist at Bank of Singapore.

The euro advanced 0.22 percent versus the dollar while the Australian dollar, often considered a barometer of global risk appetite, rose 0.2 pct and touched its highest level since december 20.

The euro and the Australian dollar led gainers with the latter also benefiting from the weekend news of growing policy stimulus in China.

He warned, however, that there is continued uncertainty about global growth, trade talks between the United States and China and USA monetary policy.

CHINA'S yuan headed for its biggest gain against the dollar in a month, unperturbed by the central bank's monetary easing as the country's economy slows.

Markets had already gone much further to price in a major chance of a cut in rates this year, and some of that exuberance was tempered by Powell's emphasis on the word "patient" in his speech on Friday.

"Last Friday's strong U.S. jobs data suggested that recession fears were overblown", said Philip Wee, currency strategist at DBS in a note.

But market expectations for further Fed tightening this year have shifted markedly in the last few months, with some traders now expecting even a rate cut this year.

Wee said he still expects the Fed to hike rates twice this year.

Among other precious metals, silver was up 0.4 percent at $15.75 per ounce, while platinum rose 0.8 percent to $829, having touched a more than one-month high of $831.10 earlier in the session. The move frees up $116 billion for new lending as it tries to reduce the risk of a pronounced fall in the pace of economic growth.

Dealers started the week on the front foot following a surge on Wall Street Friday that came after figures showed more than 300,000 United States jobs were created in December, tempering recent concerns about growth.

Powell on Friday said the USA central bank would be more sensitive to downside risks in the market, adding that it was "prepared to shift the stance of policy" if needed. Spot gold was trading 0.5 percent higher at $1,291.83 an ounce.

The two sides have until March 1 to make a deal, after which Trump has pledged to ramp up tariffs to 25 percent, from 10 percent, on $200 billion worth of Chinese imports.

After gains of more than 2 percent in Shanghai and HK on Friday before the U.S.jobs data and Powell's comments, both markets added nearly 1 percent more on Monday.

Elsewhere, the Australian dollar was lower by 0.07 per cent at US$0.7141.

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