Saturday, September 18, 2010

Gold sets new all-time peak as stocks waver

NEW YORK: Global stocks wavered and oil prices sank on Friday, Sept 17 after a worse-than-expected reading of U.S. consumer sentiment pricked optimism over upbeat earnings from Oracle, while gold prices hit a third high for the week.

Gold surged to an all-time peak of $1,282.75 an ounce in European trading on speculation the U.S. Federal Reserve may move to increase the money supply in an effort to boost growth and stave off a possible slide back into recession.

The weak U.S. consumer data and fresh worries over European debt hurt the euro and enhanced the dollar's safe-haven appeal. The yen fell near a one-month low against the U.S. dollar on worries that Japan will again intervene in currency markets after its first entry in six years on Wednesday.

Although other data showed muted U.S. inflation in August, the slide in consumer sentiment to a 13-month low in the first part of September kept fears of deflation alive and supported safe-haven assets such as U.S. Treasuries.

"I'm not surprised to see the market struggling a bit on this," Matthew Strauss, senior currency strategist at RBC Capital Markets in Toronto, said of the consumer sentiment report. "It plays into the uncertainties about what a sustainable recovery would look like."

Major stock indexes meandered around break-even for much of the day, with MSCI's all-country world index ending flat for the day.

Wall Street opened sharply higher, with the benchmark S&P 500 Index breaking through a June 21 intraday high after bellwether Oracle Corp reported better-than-expected results and an upbeat outlook late Thursday.

The benchmark S&P 500 briefly overcame technical resistance around 1,130 to push through intraday highs set in June and August. But a decisive move above that level, which on solid volume would be a bullish sign, did not happen.

"We're in a period right now where the market is correcting down from its highs," said Marty Mitchell, head of government bond trading at Stifel Nicolaus in Baltimore. "And absent this type of external European events, the market feels like it wants to try to correct a little bit lower."

The Dow Jones industrial average closed up 13.02 points, or 0.12 percent, at 10,607.85. The Standard & Poor's 500 Index added 0.93 point, or 0.08 percent, to 1,125.59. The Nasdaq Composite Index climbed 12.36 points, or 0.54 percent, to 2,315.61.

U.S. crude oil futures ended with their worst weekly percentage loss in five weeks after being pummeled earlier in the week by the expected restart of a major crude pipeline from Canada into the United States.

U.S. crude for October delivery fell 91 cents, or 1.22 percent, to settle at $73.66 per barrel. The contract expires on Tuesday.

U.S. November crude fell 82 cents, or 1.08 percent, to settle at $74.63 a barrel and ICE Brent for November fell 37 cents to $78.11 at 2:43 p.m. EDT (1843 GMT).

U.S. government debt prices rose.

The benchmark 10-year U.S. Treasury note was last up 5/32 in price to yield 2.74 percent.

The dollar, which fell to a 15-year low beneath 83 yen before Japan intervened on Wednesday, was up 1.8 percent against the yen for the week, its best week since late April.

On Friday, it was unchanged at 85.78 yen, while the euro was down 0.2 percent at $1.3041, well off a session peak of $1.3159.

U.S. December gold futures settled up $3.70 at $1,277.50 an ounce.

Copper rose to a 4-1/2 month high as falling inventories and reassuring comments from China's central bank on monetary policy boosted industrial metals.

Overnight in Asia, the Nikkei share average rose 1.2 percent, capping a 4.2 percent gain for the week that was the biggest weekly advance since December 2009, after intervention in the yen brightened the prospects of exporters.

MSCI's index of Asia-Pacific shares outside Japan rose 1.0 percent. - Reuters

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