COMMODITIES : Gold Futures Drop $6.90 an Ounce in N.Y. to 18-Month Low
Gold futures prices, undermined by slack investor demand due to the improved economic scenario, plunged to their lowest level in 1 1/2 years Friday on New York’s Commodity Exchange.
On other markets, prices for future delivery of silver, sugar, cotton, oil, soybeans, grains and cattle all declined. Pork futures gained and stock index futures retreated.
Gold for October delivery traded as low as $410 an ounce Friday, the lowest price for near-month delivery since March 23, 1987, when the April contract dropped to $406.90.
October gold settled at $412.90, $6.90 below Thursday’s final price.
Gold prices have been falling gradually all year, although they stabilized during the summer in response to the inflationary implications of the drought-driven rise in grain prices. Gold began the year at about $480.
“The price has been going down and it’s still going down but it’s picking up some steam,” said Craig Sloane, precious metals analyst with Smith Barney, Harris Upham & Co. in New York.
The main negative factor in the gold market is the improved inflation outlook, analysts said. Gold historically holds its value during times of rising prices, so demand for the metal typically rises with prospects for higher inflation.
Recent credit-tightening moves by the Federal Reserve have slowed the growth of the economy and relieved inflationary pressures.
Silver Futures Skid
Sloane said gold prices probably would fall again on Monday based on chart analysis that predicts the next point of firm support at $390 an ounce.
Silver futures also finished sharply lower, dropping rapidly in the closing minutes of the session.
Silver settled 14.1 to 15.2 cents lower, with September at $6.326 an ounce.
Sugar futures skidded to a sharply lower finish on New York’s Coffee, Sugar & Cocoa Exchange on technical factors in the absence of fundamental supply-and-demand factors, said Arthur Stevenson, an analyst in New York with Prudential-Bache Securities Inc.
Sugar settled 0.50 to 0.67 cent lower, with October at 10.06 cents a pound.
Cotton futures fell the 2-cent-a-pound permitted limit for the second straight day on the New York Cotton Exchange as fears of damage to cotton crops from Hurricane Gilbert continued to fade, analysts said.
Cotton settled 1.65 to 2 cents lower, with October at 52.90 cents a pound.
Energy futures also posted steep losses on the diminishing prospects that Gilbert would seriously disrupt oil refinery operations on the Texas-Louisiana coast, analysts said.
West Texas Intermediate crude oil settled 32 to 33 cents lower, with October at $14.57 a barrel; heating oil was 1.33 to 1.49 cents lower, with October at 41.37 cents a gallon, and unleaded gasoline was 1.28 to 1.72 cents lower, with October at 44.22 cents a gallon.
Soybean futures prices plunged in late trading on the Chicago Board of Trade as sellers chased buyers and found none. Grain futures also finished lower.
Trigger Sell Orders
“In general, we ran out of bullish news this week and when the market started looking for consumption buying and speculative buying, all it found was sell stops,” said Steve Freed, grain analyst with Dean Witter Reynolds Inc. in Chicago.
Sell stops are price levels that trigger large numbers of sell orders.
Wheat settled 4 to 6.5 cents lower, with September at $4.03 a bushel; corn was 0.25 cent to 5 cents lower, with September at $2.7875 a bushel; oats were 7 to 9.25 cents lower, with September at $2.58 a bushel, and soybeans were 16 1/2 to 26 cents lower, with September at $8.475 a bushel.
Pork futures gained on technical factors on the Chicago Mercantile Exchange while cattle futures finished mostly lower on position-evening ahead of the Agriculture Department’s monthly seven-state cattle-on-feed report.
The report, issued after the close, said the number of cattle being fed for slaughter as of Sept. 1 in the seven major beef states was down 2% from a year ago.
Placement of new cattle and calves in fattening pens last month was down 16% from a year ago while marketings of feed cattle were unchanged.
Most analysts had expected the placement and marketing numbers to be much higher. They predicted near-month cattle futures would fall as much as 1 cent a pound on Monday in reaction to the report.
Live cattle settled 0.05 to 0.57 cent lower, with October at 69.95 cents a pound; feeder cattle were 0.18 cent lower to 0.10 cent higher, with September at 79.80 cents a pound; hogs were 0.02 to 0.45 cent higher, with October at 37.97 cents a pound, and frozen pork bellies were 1.93 cent to the limit 2 cents higher, with February at 50.65 cents a pound.
Stock index futures advanced moderately on the Chicago Mercantile Exchange. The contract for December delivery of the Standard & Poor’s 500 index settled 1.50 points higher at 271.65.
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