Gold Plummets on Stronger Dollar
30, Mar 2008 03:30:00
NEW YORK -- Gold prices fell sharply Friday after the dollar ticked higher and crude oil pulled back, diminishing the precious metal's appeal as a hedge against inflation. Other futures also traded lower in a broad commodities sell-off that saw silver, copper, corn and soybeans drop sharply. The greenback gained against the euro even after data from the Commerce Department showing that consumer spending rose by only 0.1 percent in February _ the worst showing since September 2006. However, a key measure of inflation rose only 0.1 percent, not including food and energy. U.S. stocks and bonds rose following the news, siphoning away funds from commodities like gold. "A better stock market, a better bond market and benign inflation figures all came together at the same time to push gold lower," said George Gero, vice president at RBC Capital Markets Global Futures in New York. "Crude being down added fuel to the fire." Gold for April delivery fell $23.30 to $925.50 an ounce on the New York Mercantile Exchange after earlier falling as low as $951.10. Other precious metals also traded lower. Silver for May delivery lost 75.5 cents to fetch $17.795 on the Nymex, while May copper fell 4.1 cents to $3.8320 a pound. The steep losses were reminiscent of last week's huge futures sell-off in everything from copper to corn, prompted in part by a massive liquidation by hedge funds. The drop raised concerns of a slowdown in the white-hot commodity market, although analysts say such volatility is to be expected in an era of rocketing demand for raw materials, a weak U.S. dollar and economic uncertainty. "Commodities are now so highly priced that the volatility is larger," Gero said. In energy markets, crude oil retreated Friday on a stronger dollar and word that a bombing of a major oil pipeline in southern Iraq won't significantly slow exports. Prices shot up Thursday on fears that the attack in Basra would cause a major export disruption. Light, sweet crude for May delivery fell $2.59 to $104.99 a barrel on the Nymex. Prices have gained $6.72, or 6.6 percent, in the last three days. Other energy futures also fell Friday. April gasoline futures dropped 1.51 cents to $2.7012 a gallon on the Nymex, while April heating oil futures slipped 4.42 cents to $3.1041 a gallon. In agriculture futures, wheat prices fell to the lowest level in almost two months Friday, heading for their third straight decline. Wheat for May delivery dropped 37 cents to $9.77 a bushel on the Chicago Board of Trade. Prices earlier dropped as low as $9.74, the lowest level since Feb. 4. Other agriculture futures also traded lower. Soybeans for May delivery also dropped sharply, plunging 66.25 cents to fetch $12.61 a bushel on the CBOT. May corn, meanwhile, lost 4.5 cents to $5.51 a bushel.