MW: Gold falls as CPI data reduce inflation worries
Copper contract makes further gains
Gold futures moved lower Wednesday for a second session, as economic data that showed falling U.S. consumer prices dampened inflation worries and reduced the precious metal's appeal as protection against rising prices.
The Labor Department reported overall consumer prices index fell a seasonally adjusted 0.1% in March, in line with expectation. The government also reported Tuesday that inflation at the wholesale level fell more sharply than had been anticipated last month amid weaker energy prices.
Gold for June delivery fell $1.40, or 0.2%, to $890.60 an ounce on the Comex division of the New York Mercantile Exchange. It had been modestly higher ahead of the update on consumer prices.
"The lower CPI print is certainly not friendly to gold," said Brian Kelly, chief executive officer of Kanundrum Research, a commodities and macroeconomic research firm. "Couple that with a stronger dollar and we have a significant headwind for the yellow metal."
Holdings in SPDR Gold Shares the biggest exchange-traded fund oriented toward gold, remained unchanged for a third day. SPDR gold holdings stood at 1,127.68 tons Tuesday, according to latest data from the fund.
In other metals futures dealings Wednesday, silver for May delivery lost 0.2% to $12.74 an ounce. June palladium was down 1.2% at $235 an ounce, while July platinum gained 0.2% to $1,220.10 an ounce.
Back on the rise, May copper added 1.9% to $2.1555 a pound.
On metals traders' radar screens, energy prices decreased 3% in March, with declines in fuel oil, gasoline and natural gas, data compiled by the Labor Department showed. Meanwhile, food prices also eased, off 0.1%.
The core CPI, which excludes food- and energy-price inputs, rose 0.2% for the third consecutive month, boosted by higher prices for tobacco and smoking products as well as new vehicles. Economists polled by MarketWatch had expected the March core rate to gain 0.1%. See full story.
Meanwhile, manufacturing firms in the New York region said their business was weakening in April, but at a slower pace than in March, a survey showed. The Empire State index improved to negative 14.7 in April from negative 38.2 in March.
But there was more gloomy news from financial and technology companies, which could potentially burnish gold's safe-haven appeal.
For starters, Intel Corp. reported lower sales and earnings in the first quarter and gave a cautious outlook on its business for the three months through June.
And UBS AG the struggling Swiss bank, said it expects to post a loss of nearly 2 billion Swiss francs ($1.8 billion) for the first three months of 2009 and announced nearly 9,000 more staffers will lose their jobs.
