Asian Shares Rise on US Earnings Reports; Gold Surges

Gold hit fresh record highs on Monday as investors hedged against a weak dollar, while Asian shares gained ground after upbeat reports from US retailers underpinned confidence the global economy is recovering.

Gold surged to a record above $1,132 an ounce, pulling up platinum to its highest level since September 2008, as the dollar dipped as much as 0.4 percent against a basket of currencies and on strong demand for gold futures.

The dollar slipped as traders took a lack of agreement on currencies among Asian and US leaders at a regional summit as a cue to sell the greenback, even as speculation of a near-term yuan appreciation cooled.

Gold, which has gained 10 percent in the past two and a half weeks, was also helped by comments from investment fund BlackRock, a manager and adviser to the US Federal Reserve, that gold would rise further and central banks would be net buyers of the commodity this year.

“The most recent breakout in the gold price in US dollars has caused most gold prices to start trending higher at the same time,” Evy Hambro, who runs two BlackRock commodities funds that are among the world’s largest, said in Sydney.

He added that investors were now looking for gold to rise in other currencies as well as US dollars.

“When you start to see the price rising in a range of different currencies, it is a clear sign of a very strong market to come,” Hambro said.

The MSCI index of Asia Pacific stocks traded outside Japan rose 1.5 percent, half the regional gauge’s gain last week.

Hopes that the global economy is on a recovery track were reinforced by upbeat US earnings reports on Friday from Walt Disney and the retailer Abercrombie and Fitch, together with a bullish outlook from JC Penney.

“There are flickerings of improvement in the US economy. It has been slower than people expected but as sure as eggs it is going to happen,” said Michael Heffernan, senior client adviser at Austock Group in Australia.

However, the MSCI Asia-Pacific index is already up by two-thirds this year, which means short-term gains could be more muted, analysts said.

The Nikkei average rose just 0.2 percent despite third-quarter growth data that showed Asia’s biggest economy grew at its fastest pace in more than two years. Gains were curbed by fears the recovery could lose momentum in coming quarters due to weak domestic demand.

News of big share issues by Japan’s biggest bank, Mitsubishi UFJ Financial Group, and electronics giant Hitachi also weighed heavily on sentiment. Shares in Mitsubishi dived 5.5 percent while Hitachi shares slumped 8.5 percent.

Shares in China outperformed the region, rising nearly 2.7 percent, as they continued to attract strong fund inflows following bullish Chinese economic data in the past week.

Analysts said US President Barack Obama’s visit to China gave a boost to shares that would benefit if Beijing allowed its currency to strengthen.

Singapore shares also rose more than 2 percent, while gains elsewhere in the region from Mumbai to Hong Kong ranged from 1.1 percent to 1.7 percent.

Gold’s continued rise boosted shares of resources companies across the region, including Australian mining firm Rio Tinto, which jumped nearly 5 percent.

Oil prices also benefited from a weak dollar, with US crude futures up more than 1 percent to around $77.30 a barrel. Reuters

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