COMMODITIES : Trade Data Fuels Rebound in Precious Metals Futures
Precious metals futures rebounded in price Thursday, erasing the previous two days’ steep losses as investors shocked by the widening trade deficit sought security in gold, silver and platinum.
On other markets, stock index and bond futures fell sharply in response to the trade figure; energy futures advanced for the fourth straight day; grains and soybeans were mixed, and livestock and meat futures were mostly higher.
The Commerce Department’s report that the trade deficit widened by $1.4 billion in February to $13.8 billion prompted some investment fund managers to sell stocks and bonds and move that money into precious metals, which tend to hold their value in troubled times, analysts said.
“We’re getting some investor flight out of stocks and bonds and into precious metals, sort of a flight to safety,” said Bernard Savakl, metals analyst for Paine Webber Inc. in New York.
On New York’s Commodity Exchange, gold for June delivery moved back above the psychologically important level of $450 an ounce after settling at $449.60 on Wednesday.
The trade figure was a bullish surprise for the metals markets, which had sold off in recent days on expectations of a reduction in the trade deficit to $11 billion or less, Savakl said.
The weaker dollar and late-morning news reports of an explosion in downtown Johannesburg, South Africa, lent further support to the markets. South Africa is a rich source of gold and platinum, and heightened violence there could disrupt mining of the metals.
Financial Futures Dive
On the Commodity Exchange, gold settled $6.90 to $8.80 higher, with the contract for delivery in June at $456.50 an ounce; silver was 12.5 cents to 14.1 cents higher, with May at $6.47 an ounce. Platinum on the New York Mercantile Exchange was $17.60 to $18.30 higher, with July at $540.40 an ounce.
Financial futures markets registered disappointment in the trade figure. The contract for June delivery of the Standard & Poor’s 500 stock index fell 13.7 points to 258.40 on the Chicago Mercantile Exchange. The June Treasury bond contract on the Chicago Board of Trade fell 1.932 points to 89.16.
Energy futures posted solid gains on the New York Mercantile Exchange for the fourth straight day on continuing expectations that many oil-producing countries will agree to limit production to support prices.
“There’s a lot of confidence coming back into the market,” said Bob Baker, an analyst in New York with Prudential-Bache Securities.
West Texas Intermediate crude oil settled 18 cents to 31 cents higher, with May at $18.30 a barrel; heating oil was 0.35 cent to 0.49 cent higher, with May at 49.51 cents a gallon, and unleaded gasoline was 0.06 cent lower to 0.46 cent higher, with May at 52.36 cents a gallon.
Late Rebound
A late rally pushed grain and soybean futures to a mixed close on the Chicago Board of Trade, possibly marking the end of a recent sharp downturn in prices.
Prices had fallen on Tuesday and Wednesday and continued lower on Thursday until shortly before the closing bell, when C&D; Commodities, the largest speculative trading firm on the floor, began buying contracts and sparked “a spectacular closing rally,” said Victor Lespinasse, a trader for Dean Witter Reynolds.
Wheat settled 0.75 cent to 2 cents lower, with May at $3.165 a bushel; corn was 0.50 cent lower to 1 cent higher, with May at $2.0425 a bushel.
Tables, Page 10
