BULLION
Gold prices were hit hard on Tuesday as intense selling pressure weighed the counter down, resulting in it reaching an eleven week low. The US economic data displayed weaker than expected results, but failed to pull the stock markets down and the little demand for gold as an alternative asset added to the selling pressure in the yellow metal.
Strong corporate earnings have helped the stocks hold on to its gains yesterday. U.S. gold futures for August delivery settled at a three-month low at $1,158 an ounce, down $25.10, at the New York Mercantile Exchange. The weakness in gold prices was also traced back to the declining investment demand of the metal due to lesser need for safety among investors.
The holdings of SPDR, the largest gold backed exchange traded fund, point towards the waning investment demand. The trust has recorded an outflow of 18.7 tonnes of gold so far this month. Gold priced in euros and sterling also fell on Tuesday. Euro-priced gold fell to its weakest since May 4 at 892.23 euros an ounce, while sterling-denominated bullion reached a three-month trough at 744.30 pounds an ounce.
ENERGY
The Euphoria in the market that kept crude oil well supported disappeared yesterday as weaker than expected US economic data turned the sentiments negative. New York's main contract, light sweet crude for delivery in September, slipped $US1.48 to $US77.50.
In addition, the American Petroleum Institute showed that crude oil inventories rose to 356.3 million barrels, whereas, gasoline inventories were reported to have climbed 877000 barrels to 222.3 million barrels last week. However, the report from the Energy Information Administration that is scheduled for release later this evening is expected to show a decline in stocks.
Natural gas prices remained buoyed in the market yesterday as expectations of hotter than expected weather in the major gas consuming areas of US have increased the demand for the commodity. Temperatures will be above normal across much of the U.S. Midwest and East from Aug. 1 to Aug. 5, according to the National Weather Service.
Natural gas for August delivery rose 6.3 cents, or 1.4 percent, to settle at $4.675 per million British thermal units on the New York Mercantile Exchange. However, natural gas supplies continue to increase. The Energy Department of US is expected to report a rise of 32 billion cubic feet. The five-year average gain is 50 billion. The stockpile total of 2.891 trillion cubic feet was 9.9 percent higher than the five-year average, narrower than a 10.7 percent gap the previous week.
BASEMETALS
Base metals prices fell yesterday, reversing some of its gains from the previous week as weaker than expected housing and consumer confidence numbers from US, the second largest consumer of copper, dented the demand for the metals. The consumer confidence of US fell to the lowest in five months due to concerns over uncertain economic outlook.
The index fell to 50.4 points from 54.3 last month, based on a survey of 5000 US households. It is now at its lowest level since February. Sentiments in the market remained damp also because of losses in the stock markets of China, the largest base metals consumer, as concerns of rising debt of bank in the country. In addition, Single-family house prices remain 29.1 percent below peaks four years ago, according to a Standard & Poor's/Case-Shiller index.
