Friday, 11 Feb 2011 08:17 AM
Greater confidence in the economy is leading investors to
move money out of gold and into riskier assets in search of
bigger profits.
Gold prices have fallen 4.2 percent since the beginning of the
year as more evidence surfaced that the economy is
strengthening.
More positive economic news came Thursday when The Labor
Department said the number of people applying for unemployment
benefits for the first time fell to the lowest point since early
July 2008.
In addition, the Commerce Department said wholesale businesses
increased inventories 1 percent in December. Economists consider
that a healthy level for inventories.
Stocks, which are considered riskier assets than gold, have been
rising since the beginning of the year. The Standard & Poor's
500 index, the most widely used measure for stocks of large U.S.
companies, is up 5.1 percent so far this year.
"A lot of that flight-to-quality bid that we saw in gold over
the past year has come out of the market," LaSalle Futures Group
analyst Matt Zeman said. "So far, there just hasn't been a good
driver to really propel it up."
Gold and silver typically are considered safer assets to hold
during uncertain economic times. Many analysts believe gold
prices will climb higher this year because there still are
global economic issues that need to be addressed.
As an example, investors are looking for more clarity about the
next steps for Egypt's government after President Hosni Mubarak
agreed to transfer power to his vice president. The move comes
after days of violent protests demanding Mubarak's ouster.
Gold for April delivery fell $3 to settle Thursday at $1,362.50
an ounce while March silver fell 18.2 cents to settle at $30.094
an ounce.
In other metals contracts for March, copper rose 1.95 cents to
settle at $4.5435 a pound and palladium fell $5.55 to $820.90 an
ounce. April platinum fell $28.60 to $1,830.80 an ounce.
Oil prices rose slightly because the developments in Egypt eased
worries that oil shipments from the Middle East could be
disrupted by ongoing protests.
Benchmark oil for March delivery added 2 cents to settle at
$86.73 a barrel on the New York Mercantile Exchange.
In other Nymex trading for March contracts, heating oil fell
5.82 cents to settle at $2.7107 per gallon, gasoline futures
lost 5.62 cents to $2.4698 per gallon and natural gas gave up
5.8 cents to $3.986 per 1,000 cubic feet.
In March agriculture contracts, wheat fell 23.25 cents to settle
at $8.6275 a bushel, corn added 0.5 cent to $6.9850 a bushel and
soybeans lost 18 cents to settle at $14.33 a bushel.
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