Federal Reserve Chairman Alan S. Greenspan's prediction of modest economic growth and continued low inflation received a sharp negative reaction on the precious metals futures markets Tuesday.
On other markets, which were not necessarily affected by Greenspan's comments, prices for future delivery of livestock, meat, orange juice, grains, soybeans and stock indexes all retreated. Energy futures advanced.
Analysts said Greenspan's 1988 economic forecast, delivered in testimony before the House Banking Committee in Washington, was viewed as a price depressant for precious metals, which tend to perform well as investments during bad economic times.
"The most important thing he said for the precious metals was that inflation is expected to be at a moderate rate of 3.25% to 3.75% for 1988," said Bette Raptopoulos, an analyst for Prudential-Bache Securities Inc. in New York.
Low Demand for Beef
Peter Cardillo, commodity trading adviser for Josephthal & Co. in New York, said precious metals futures also were pressured by the day's lower prices for most other commodities, reflected by a 2.68-point decline in the Commodity Research Bureau's index of 21 commodities.
Among the precious metals, platinum futures registered the sharpest drop, falling $15 across the board at the New York Mercantile Exchange, where the contract for April delivery settled at $448.80 an ounce.
On New York's Commodity Exchange, gold settled $3 to $4.30 lower with April at $444.30 an ounce, and silver was 11 cents to 11.8 cents lower with March at $6.30 an ounce.
Some feeder cattle futures fell the daily limit of 1.50 cents a pound on the Chicago Mercantile Exchange, and other livestock and meat futures also posted steep losses.
Cattle futures weakened in reaction to a variety of fundamental factors, including relatively slack wholesale demand for beef products, high retail prices for beef and good availability of slaughter-ready cattle, said Tom O'Hare, an analyst for Smith Barney, Harris Upham & Co.
A monthly Agriculture Department report showing the number of pork bellies in cold storage to be higher than the market had expected sent pork complex futures down sharply, O'Hare said.
Orange Juice Competition
Live cattle settled 0.70 cent to 1.23 cents lower with April at 71.77 cents a pound; feeder cattle were 0.75 cent to 1.50 cents lower with March at 81.02 cents a pound; hogs were 0.10 cent to 0.77 cent lower with April at 43.67 cents a pound, and frozen pork bellies were 1 cent to 1.85 cents lower with March at 51.80 cents a pound.
Frozen concentrated orange juice futures sank on the New York Cotton Exchange in reaction to a price cut of $25 a ton for Brazilian juice, analysts said. Cheaper Brazilian orange juice could result in less demand for U.S. juice. Orange juice settled 2.80 cents to 3.90 cents lower with March at $1.6335 a pound.
Wheat futures prices declined on the Chicago Board of Trade in reaction to the Agriculture Department's announcement late Monday that it would replace its weekly Friday auctions of surplus wheat with three weekly auctions beginning March 2, analysts said.
Traders fear that the new auctions could put as much as 30 million additional bushels of wheat onto the open market weekly, which would tend to depress prices.
Oil prices rose slightly in quiet trading on the New York Mercantile Exchange, driven largely by technical factors, analysts said. Stock index futures retreated on the Chicago Mercantile Exchange, where the contract for March delivery of the Standard & Poor's 500 index settled 1.35 points lower at 265.50. The underlying spot index was off 0.62 cent at 265.02.
Tables, Page 14