COMMODITIES : Gold Prices Tumble to a 19-Month Low
Gold futures prices fell to a 19-month low Tuesday on the New York’s Commodity Exchange as gold producers sold futures to hedge against further declines in the cash market, analysts said.
On other markets, coffee futures rallied strongly; pork futures led the livestock complex higher; grains and soybeans were mixed; energy futures were mixed and stock index futures advanced.
Gold for October delivery traded as low as $402.30 an ounce, the lowest price since Feb. 24, 1987, when gold futures last dipped below $400. Prices recovered a bit near the close when traders holding short (sell) positions took profits by buying at the low levels, analysts said.
Gold producers were the among the heaviest sellers after the market registered little interest in the Commerce Department’s report on the gross national product, said Bette Raptopoulos, metals analyst in New York with Prudential-Bache Securities Inc.
Scouting for Inflation
The report showed that the U.S. economy expanded at a rate of 3.0% in the April-June quarter, compared to a rate of 3.4% in the previous quarter.
The GNP number added to the already bearish sentiment in the inflation-sensitive gold market but another number in the report, the GNP deflator, rose at an inflationary annual rate of 5.5%, compared to 1.7% in the first quarter. The deflator reflects changes in buying patterns as well as prices.
Raptopoulos said gold producers were watching the market’s reaction to the deflator and sold when the market failed to rally.
John Norris, chief trader of precious metals for Citibank in New York, said the selloff reflected further bearishness in the market “on the lack of any perception of inflation on the horizon. It could go through $400 and is going to get tested at that level.” Silver futures followed gold lower on the Comex while platinum futures fell sharply on the New York Mercantile Exchange.
Gold settled $3.90 to $4.70 lower, with the contract for delivery in October at $406.20 an ounce; silver was 11.8 to 12.8 cents lower, with September at $6.252 an ounce; platinum was $8.10 to $8.70 lower, with October at $494.90 an ounce.
Coffee futures surged on New York’s Coffee, Sugar & Cocoa Exchange amid optimism about negotiations between consumer and producer nation-members of the International Coffee Organization.
The ICO convened a two-week meeting in London on Monday to discuss changes in its price support policies.
“There seems to be an aura of cooperation and the prospects for delegates completing their work by the first of October is very bright at this point,” said Bert Ruiz, a coffee broker with Balfour Maclaine Corp. in New York.
Pork futures gained sharply on the Chicago Mercantile Exchange on a mixture of chart-based factors and position-evening ahead of the Agriculture Department’s Sept. 30 hogs and pigs report, a quarterly look at the size of the U.S. hog herd.
Cattle futures gained on spillover buying from the pork market and bullish attitudes about the long-term outlook for the cattle market, analysts said.
Live cattle settled 0.27 to 0.70 cent higher, with October at 69.37 cents a pound; feeder cattle were 0.25 to 0.52 cent higher with September at 80.37 cents a pound; hogs were 0.45 cent to 1.25 cents higher, with October at 38.77 cents a pound; frozen pork bellies were 0.95 cent to 1.17 cents higher, with February at 50.70 cents a pound.
Wheat and corn futures advanced on the Chicago Board of Trade amid rumors of new U.S. grain sales to the Soviet Union but soybeans finished mixed on a lack of strong bullish signals.
Wheat settled 5.75 to 8.25 cents higher, with September at $4.045 a bushel; corn was 2.5 lower to 2.75 cents higher, with September at $2.7375 a bushel; oats were 1.5 cents lower to 4 cents higher, with September at $2.505 a bushel; soybeans were 0.50 cent lower to 10.5 cents higher, with September at $8.205 a bushel.
Stock index futures advanced slightly on the Chicago Mercantile Exchange, where the contract for December delivery of the Standard & Poor’s 500 index settled 0.80 point higher at 272.65.
