Posted on 04/29/2008 12:33:42 PM PDT by BenLurkin
NEW YORK (AP) -- Gold futures plunged to a four-month low Tuesday after a stronger dollar and a drop in crude prices fed selling of the metal traditionally viewed as a hedge against inflation. Other commodities fell in a broad sell-off, with silver, copper, heating oil and agriculture futures all trading lower.
The dollar strengthened against several major currencies as investors bet that the Federal Reserve may be poised to wind up its interest-rate cutting campaign and turn its attention to curbing inflation. The Fed, which begins a two-day policy meeting Tuesday afternoon, is expected to cut its benchmark rate by a quarter point on Wednesday but then hold steady for the rest of the year.
Lower rates can boost the economy but tend to undercut the dollar, encouraging investors to buy hard assets like gold, which is known for holdings its value.
"Many people expect tomorrow's rate cut will be the last for some time, so that would alleviate some downward pressure on the dollar and take away from the upward pressure on gold," said Carlos Sanchez, analyst with CPM Group in New York.
Gold for June delivery dropped $18.70 to settle at $876.80 an ounce on the New York Mercantile Exchange. The contract earlier fell as low as $873.80, its lowest level since Jan. 22. Gold is up 3 percent so far this year but has retreated far from its record of $1,038.60 set March 17.
Analysts blame the slide on profit-taking after the run-up, weak demand for jewelry and a sense among investors that the worst of the credit crisis may have passed, which would diminish gold's allure as a safe-haven metal.
"Given the upward surge in gold this year, it's probably logical that prices would come off," Sanchez said, adding that prices could recover in the coming months.
Other precious metals also fell Tuesday. Silver for May delivery dropped 47.3 cents to settle at $16.545 an ounce on the Nymex, while May copper fell 3.6 cents to $3.8995 a pound.
In energy markets, crude oil fell more than $3 a barrel on the stronger dollar and data showing falling demand even as supplies are rising. A monthly Energy Department report said demand for finished petroleum products dropped 8.5 percent in February from January, and demand for gasoline fell by 6.2 percent.
Light, sweet crude for June delivery fell $2.94 to $115.81 a barrel on the New York Mercantile Exchange.
Other energy futures also traded lower. May gasoline futures fell 8.76 cents to $2.9431 a gallon on the Nymex, while May heating oil futures dropped 4.62 cents to $3.2526 a gallon.
In agriculture futures, wheat prices fell sharply amid expectations that an improved U.S. crop will help ease supply global concerns. Wheat for May delivery fell 31.5 cents to $7.945 a bushel on the Chicago Board of Trade.
Other agriculture futures also fell. May soybeans lost 3.5 cents to $12.80 a bushel on the CBOT, while May corn fell 9 cents to $5.91 a bushel.
Must have been the Chuckie Schumer’s) scathing rebuke of Bush’s calling on oil drilling and tax holiday for gasoline. Schumer and Peolosi...tax the oil companies and just wait public till that Ethanol horse comes in plan! The markets shook at their blinding brilliance and take charge attitude in answering Bush’s common sense. I sense a stinging defeat in Novemeber with maybe the Repubs taking back the House or Senate and mcCain winning comfortably.
Ping
the economy is boiling, just don’t be in a bubble when it pops.
They need a balloon that says: VOTE DEMOCRAT............
LOL, true, but for now that could fit into "bogus schemes"
Well I can agree with that except for the “Public Office” bubble. There isn’t a single politician who ended up more poor than when they can into congress. They somehow always end up millionaires. I wonder why that is?
If these economic problems are made up by the liberals (as I’ve heard the conspiracy go) they sure are backfiring.
Although a lot of Americans agree that the economy is in a bad way, the majority of those polled still pick McCain as the one who can best deal with it.
I doubt I will consider getting back in until it is at least down to $600 to $700 per ounce, and quite possibly not even then. I've made some good money in gold in the last decade. Now is not the time for gold.
Besides the natural correction in gold and silver that's happening, I am anticipating that the struggle between the forces of inflation and deflation will be won eventually by deflation.
Also the central banks are doing what they can to push gold down, as that price is seen as a key inflation indicator, and they want to be able to fight their bigger worry, deflation, without provoking too much inflation. See for example CNN Money: IMF backs budget plan involving gold sale (April 7, 2008).
Falling silver prices are one of the better leading indicators of coming depressions.
I'm figuring that this strengthening of the dollar is at least a several month trend, as the fallout from the global credit and mortgage crunch is felt abroad. Real estate prices are falling in many countries now.
Check out the The Panic of 1837, also here at Cyclesman.com: The financial panic of 1837, and the resulting Six Year Depression 1837-1843. Some of the details obviously have to change for the present, but there seems to be some similarities as well.
We'd have to research the context of this illustration - perhaps it refers to the "coattail effect" of supporting the election of a particular official, and the potential ruin of contributors.
“Gold futures plunged to a four-month low Tuesday after a stronger dollar and a drop in crude prices fed selling of the metal traditionally viewed as a hedge against inflation. Other commodities fell in a broad sell-off, with silver, copper, heating oil and agriculture futures all trading lower.”
This is a lot like the weather in Ohio, wait five minutes and it will change.
One day we are doomed, the next, everthing is peachy-keen. It all leads me to believe that our economy is more emotion that fact and that scares the bee-jeeber’s out of me.
bump
You would do better to ignore the media, since their sales are driven by the scares they push. These have only minimal connections to reality.
And the runup was far greater in Iceland, Sweden, UK and other countries...
>>>Real estate prices are falling in many countries now.
I didn’t think about it that way. Thinking about it that way you are correct.
The economy has always been very emotionally based. IMHO the consumer confidence index is the most important stats, when consumers are confident they’re spending and that keeps things rolling, when they aren’t confident they’re not spending and that applies downward pressure. There’s plenty of other things that go into it, but in the long run 300 million people have the ability to spend us out of most troubles and the ability to not spend us out of most booms. And yeah it is kind of scary.
Or be the Treasury and print $100 bills at a cost of about 6 cents each. Now that’s a profit margin!
bump.
I'm glad to see I'm an idiot. I'd rather be stupid with cheaper gas, than a savant too poor to fill my tank!
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