Gold falls to lowest level in more than five years

Gold prices fell yesterday to the lowest level in more than five years on the outlook for higher US interest rates and as China said it held less of the metal in reserves than some analysts forecast.

Bloomberg
Hong Kong


Gold fell to the lowest level in more than five years on the outlook for higher US interest rates and as China said it held less of the metal in reserves than some analysts forecast. European stocks rose for a ninth day amid a pickup in merger activity.
Bullion slid 2% to $1,112.13 an ounce in New York, after tumbling to as low as $1,086.18. Dutch fertilizer maker OCI NV led the Stoxx Europe 600 Index to its longest rally in more than a year after CF Industries Holdings said it’s in preliminary talks about a combination with certain OCI businesses. European bonds gained as Greece’s Finance Ministry said it gave the order to repay some creditors, while Goldman Sachs Group was said to be among companies selling notes in euros. Treasuries declined.
Investors have soured on precious metals as the Federal Reserve gets closer to raising US rates for the first time since 2006. In other deal activity, Schneider Electric SE will take control of Aveva Group and Lockheed Martin Corp agreed to buy United Technologies Corp’s Sikorsky unit for $9bn.
“Investor sentiment towards gold is almost as bearish as it’s been in certainly the past 15 years,” Matthew Turner, an analyst at Macquarie Group Ltd, said by telephone from London. “The Fed seems to be sticking to its guns on a rate rise” and Chinese reserves have been taken as bearish, he said.
Gold fell for a sixth day, losing as much as 4.2%. Prices sank 2.5% last week, the most since March. Platinum slid 1.7%, extending its decline to the lowest since 2009.
China said at the end of last week that it boosted bullion assets to about 1,658 metric tons, less than brokers at GoldCore and Sharps Pixley had expected.
Holdings in the SPDR Gold Trust, the world’s largest exchange-traded gold fund, dropped 1.6% on Friday to the lowest since September 2008. Since peaking in December 2012, assets have contracted 49%.
The Stoxx 600 added 0.5% in its longest winning streak since April 2014. The gauge rallied 4.3% last week, the most since January, and closed 2% away from a record. Standard & Poor’s 500 Index futures advanced 0.1% today after the index rose 2.4% last week.
Morgan Stanley climbed 1.2% after profit beat analysts’ estimates amid a jump in trading and brokerage fees.
OCI rallied 16%. Aveva jumped 29% after Schneider agreed to merge its software business with the UK software developer. Schneider rose 0.8%.
Lockheed gained 1.9% and United Technologies advanced 1.4% in early New York trading. Greece ordered repayment of €6.8bn ($7.4bn) to creditors, the Finance Ministry said. While banks reopened three weeks after closing to prevent economic collapse, the country’s financial markets remain shut.
“It’s good to see that Greece is moving out of the headlines,” Alessandro Bee, a strategist at Bank J Safra Sarasin, said by phone from Zurich.
“The worst has been avoided and the risk-aversion sentiment that dominated markets has definitely eased. More M&A activity is among things showing that confidence is returning.”
Italy’s 10-year bond yield fell four basis points to 1.88% and Spain’s dropped to 1.91%. The rate on German bunds fell two basis points to 0.77%.
The yield on 10-year Treasuries rose three basis points to 2.38%.
While currencies of commodity-producing nations have been sinking on lower raw-materials prices, New Zealand’s dollar climbed from near a six-year low yesterday after Prime Minister John Key said the kiwi’s drop had been faster than expected.
The kiwi strengthened 0.7% to 65.74 US cents. The currency dropped to 64.99 cents on July 16, the lowest since July 2009.
The euro gained 0.2% $1.0846 and the yen slipped 0.2% to 124.32 per dollar.
South Africa’s rand and Turkey’s lira led declines in emerging markets, dropping at least 0.7% versus the dollar.
The MSCI Emerging Markets Index of stocks lost 0.6%, with gold producers Zijin Mining Group Co and AngloGold Ashanti Ltd sliding more than 6%.
Hong Kong’s Hang Seng China Enterprises Index declined 0.6%, after two days of gains, while shares trading in the mainland extended their advance for a third day.
The Shanghai Composite Index rose 0.9%. A total of 633 companies were suspended from trading on mainland exchanges Monday, or 22% of total listings, down from 635 at the close Friday.
Spanish phone-tower operator Cellnex Telecom SAU is selling its first bonds in euros, while Swiss duty-free shop operator Dufry and Goldman Sachs are also selling notes in the single currency, according to people familiar with the matter who asked not to be identified because they’re not authorized to speak publicly. AK Bars Bank of Russia hired banks for its first bonds in dollars since 2012, a person familiar said.
The cost of insuring corporate debt fell for a fourth day, according to data compiled by Bloomberg.
The Markit iTraxx Europe Index of credit-default swaps on investment-grade companies declined one basis point to a two-month low of 59 basis points, while the high-yield benchmark dropped five basis points to an almost three-month low of 260 basis points.