Posts Tagged ‘New York Mercantile Exchange’

Gold Poised to Gain as U.S. Output Data Boosts Easing Prospects

Gold may gain as manufacturing in the U.S. trailed estimates, boosting prospects of further stimulus by the Federal Reserve to spur growth and increasing demand for bullion as a haven.

Spot gold was at $1,599.03 an ounce by 10:37 a.m. in Singapore, after ending little changed at $1,597.10 yesterday. August-delivery bullion was little changed at $1,599.20 an ounce on the Comex in New York, after dropping 0.4 percent yesterday.

Manufacturing in the U.S. shrank in June to 49.7, worse than the most-pessimistic forecast in a Bloomberg News survey, from 53.5 in May, data yesterday showed, helping the dollar rebound from its biggest drop in eight months against a six- currency basket including the euro. The common currency fell today as euro-area unemployment reached the highest on record in May, raising concern the debt crisis is worsening.

“Gold lacks direction, but sees a stronger quarter ahead as spotlight returns to the U.S. economy,” Lynette Tan, an investment analyst at Phillip Futures Ltd., wrote in an e-mail today. “Gold prices have been sensitive to signs of economic weakness, which tend to increase the likelihood of monetary easing by the Federal Reserve.”

Cash gold last week capped its worst quarter since the three months to September 2008, as the Dollar Index rallied 3.3 percent, after the Fed didn’t buy more debt and instead extended a program of replacing short-term bonds with longer-term debt.

Spot silver was little changed at $27.5275 an ounce, after swinging between gains and losses. Cash platinum dropped as much as 0.6 percent to $1,446.50 an ounce, and was last at $1,452.50. Palladium fell for a second day, declining as much as 0.6 percent to $574.75 an ounce, before trading at $575.75.

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European Stocks Gain

European stocks finished higher Thursday, boosted by the continued run in strong economic indicators out of the U.S., improving sentiment about the health of the world’s largest economy.

The Stoxx Europe 600 index ended up 0.3% at 270.98. Germany’s DAX index rose 0.9% to 7144.45, while France’s CAC-40 index finished 0.4% higher at 3580.21. The U.K.’s FTSE 100 index fell 0.1% to 5940.72, underperforming its peers after Fitch Ratings cut its outlook on the U.K. to negative, saying the country’s financial flexibility was “very limited.”

The renewed confidence in the U.S. banking sector after the well-received “stress tests” results and the Federal Reserve’s upbeat remarks on the U.S. economy Tuesday, together with stronger U.S. economic indicators of late have helped to keep the upside momentum in for stock markets.

This has led U.S. stock indexes to reach multiyear highs, while major European stock indexes have recovered to levels last reached in the summer of 2011. The Dow Jones Industrial Average has been trading above the 13000 level in recent sessions, last seen in 2008. The Standard & Poor’s 500-stock index pushed above the 1400 level Thursday, also a level not seen since 2008. Elsewhere, Japan’s Nikkei has climbed above the 10000 mark and Germany’s DAX is above the 7000 level.

As such, traders noted that with major European indexes now standing at such elevated levels, there appears to be little room for further upside momentum as investors look to cash in on this rally.

Furthermore, although there has been some form of a conclusion to the Greek debt crisis, there hasn’t been a resolution to the sovereign-debt crisis in Europe and the inability of banks to warehouse risk due to risk and regulatory considerations, said analysts at Nomura. “We think financial sector deleveraging and dealers’ decreased ability to take large positions from customers means that lower volumes will increasingly move the market,” they added.

On Wall Street late in European trade, the Dow rose 0.3% to 13232, while the S&P rose 0.5% to 1401 and the Nasdaq Composite gained 0.6% to 3058.

A raft of U.S. economic data Thursday offered more confirmation that the U.S. economic recovery is gaining steam. The number of U.S. workers filing new applications for unemployment benefits fell more than expected last week. Initial jobless claims tumbled by 14,000 to a seasonally adjusted 351,000 last week. Economists surveyed by Dow Jones Newswires had forecast that claims would fall by 5,000.

Meanwhile, New York manufacturing activity accelerated in March. The Empire State’s business-conditions index increased for the fourth consecutive month to 20.21 from 19.53 in February, the highest in well over a year. Economists had expected the index to drop to 17.9.

A separate report from the Philadelphia Federal Reserve Bank showed an index on mid-Atlantic factory activity rose to 12.5 in March from 10.2 in February, better than expectations for a reading of 10.5. Additionally, U.S. wholesale prices increased in February at the fastest pace in five months, driven by rising gasoline costs. The producer price index increased a seasonally adjusted 0.4%, slightly less than expectations for a 0.5% rise.

Earlier, there was some good news to be found in the bond markets. The Spanish Treasury sold €3 billion of bonds at auction, within the target range and with yields mostly lower. “All in all, demand for the Spanish debt remained solid, despite recent talks of further slippage in their fiscal consolidation,” said Annalisa Piazza, a fixed-income strategist at Newedge.

In currency markets, the dollar trimmed gains following a stellar rise on a recent string of positive U.S. data that have diminished expectations of another round of easing from the Fed. The dollar broke through ¥84.00 to a fresh 11-month high at ¥84.17, from ¥83.73 late Wednesday in New York.

Late in Europe, it was buying ¥83.34. The euro was at $1.3083 against the greenback, from $1.3033, and the British pound was at $1.5717 from $1.5676, after Fitch’s statement on the U.K. The Swiss franc was also in focus, after the Swiss National Bank said it will maintain the minimum exchange rate of 1.20 Swiss francs per euro “with the utmost determination.”

ING Bank economist Julien Manceaux said, “[The SNB] once again stated that it is ‘prepared to buy foreign currency in unlimited quantities for this purpose,’ a strategy which is working as the SNB stabilized its assets in foreign currencies over the last few months.” The euro was at 1.2069 Swiss francs from 1.2128 francs.

Among commodities, light, sweet crude for April delivery was off 46 cents at $104.97 on the New York Mercantile Exchange. Gold for April delivery was up $5.30 at $1,648.20 per troy ounce late in Europe on the Comex division of Nymex.

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