COMMODITIES : Gold Futures at Lowest Point Since March
Gold futures prices dipped to their lowest levels in more than six weeks Tuesday, bolstering bearish projections and prompting speculation that the metal’s price could tumble as low as $400 an ounce in coming months.
On other markets, energy futures rallied, cattle futures climbed, pork futures were mixed, grains and soybeans were lower and stock index futures advanced.
It was not the depth of gold’s decline but the fact that it fell at all that analysts found remarkable. Oil prices rallied Tuesday and inflation-sensitive gold would ordinarily have done the same.
“I’ve been saying gold is in a bear market and today’s action certainly proves it,” said Peter Cardillo, commodity trading adviser with Joesphthal & Co. in New York. “We could have had an up day with the price of oil rebounding, but the market just ignored that and traded on its own.”
Gold settled $2.10 lower across the board on New York’s Commodity Exchange, with the contract for delivery in June at $445.10 an ounce, the lowest price for a lead futures contract since March 17, when the April contract settled at $444.90.
The overall strength of the economy and the fading prospects for higher inflation have the precious metals markets on the defensive, analysts said.
Craig Sloane, an analyst with Smith Barney, Harris Upham & Co., called Tuesday’s trading “another small disaster” for both gold and silver futures.
Silver Also Drops
“This is sort of a continuation of what has been a steady erosion over the last couple of months in both of these markets,” he said.
Silver settled 5 cents to 5.5 cents lower, with May at $6.298 an ounce.
Energy futures advanced on the New York Mercantile Exchange in a technical recovery from Monday’s plunge, which had been a reaction to the failure of OPEC oil ministers to agree on production cuts, analysts said.
West Texas Intermediate crude oil settled 23 cents to 26 cents higher, with June at $17.37 a barrel; heating oil was 0.09 cent lower to 0.82 cent higher, with June at 46.77 cents a gallon, and unleaded gasoline was 0.75 cent to 0.91 cent higher, with June at 50.28 cents a gallon.
Cattle futures rose sharply on the Chicago Mercantile Exchange while pork futures were mixed.
The cattle market is struggling between the reality of high cash prices and the implication of recent government reports that large numbers of cattle are being fattened for slaughter, said Chuck Levitt, an analyst in Chicago with Shearson Lehman Hutton Inc.
Hog futures were caught Tuesday between the higher cattle futures prices and sharply lower pork belly futures linked to a glut of frozen bellies, Levitt said.
The opening of livestock trading on the Chicago Mercantile Exchange was delayed about 2 1/2 hours Tuesday when water from a burst pipe flooded the exchange’s telecommunications room, forcing a halt to trading.
Grain Closes Lower
Live cattle settled 0.43 cent to 0.92 cent higher, with June at 71.57 cents a pound; feeder cattle were 0.20 cent to 0.93 cent higher, with May at 79.45 cents a pound; hogs were 0.05 cent lower to 0.33 cent higher, with June at 49.50 cents a pound, and frozen pork bellies were unchanged to 0.85 cent lower, with May at 51.25 cents a pound.
Grain and soybean futures finished lower on the Chicago Board of Trade in an up-and-down session influenced by conflicting interpretations of long-range weather forecasts, analysts said.
Forecasts called for beneficial rains Tuesday in Missouri, Nebraska and extreme southwestern Iowa, and a good chance for rain today in central and southern Illinois. Those forecasts gave the markets their negative tone.
But 6-to-10-day forecasts called for dryness and below-normal temperatures in the East with wetter weather and above-normal temperatures in the West.
Traders had a hard time deciding whether the long-range forecasts implied better or worse growing conditions, said Victor Lespinasse, a trader with Dean Witter Reynolds Inc.
Wheat settled 0.50 cent to 4.50 cents lower, with May at $2.9775 a bushel; corn was unchanged to 0.75 cent lower, with May at $2.0475 a bushel; oats were 1.25 cents to 1.75 cents lower, with May at $1.5725 a bushel, and soybeans were 0.25 cent to 2.50 cents lower, with May at $6.8925 a bushel.
Stock index futures advanced on the Chicago Mercantile Exchange, where the contract for June delivery of the Standard & Poor’s stock index settled 1 point higher at 262.70.
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