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Gold And Oil Decline As Traders Worry About The Eurozone Recovery

By:
Barry Norman
Updated: Aug 25, 2015, 00:00 UTC

Most European shares closed down on Thursday, after trading in and out of positive territory throughout the afternoon. Wall Street sank on Thursday,

Gold And Oil Decline As Traders Worry About The Eurozone Recovery

Gold And Oil Decline As Traders Worry About The Eurozone Recovery
Gold And Oil Decline As Traders Worry About The Eurozone Recovery
Most European shares closed down on Thursday, after trading in and out of positive territory throughout the afternoon. Wall Street sank on Thursday, erasing the previous day’s entire rally, as investors bypassed U.S. corporate earnings and economic reports to focus on global concerns, including Europe’s softening economy. Asia stocks joined Wall Street’s selloff on Friday as investors fretted over slowing growth in Europe.

The US dollar continued to decline to trade at 85.63 after just a week or so ago trading above the 86 price level. The Federal Reserve minutes on Wednesday and speeches from FOMC members seem to indicate that the Fed is still concerned with economic problems in China and the eurozone and their ongoing effect on the US recovery. It seems now that the Fed will push off interest rate increases.

Gold climbed off its bottom near $1190 to trade this morning at $1222.60 after soaring above $1230. Silver reversed its climb to trade at 17.293 down by 125 points this morning. Federal Reserve officials insist that the outlook for interest rates depends on how economic data evolves and isn’t driven by the calendar. They are nevertheless offering various views on the probable timing of the first increase since 2006. A healthier job market helped spark the biggest gain in Americans’ confidence in almost a year, raising prospects for the economy at the start of fourth quarter. The number of people seeking jobless benefits at state employment agencies averaged 287,750 in the four weeks ended Oct. 4, an eight-year low.

Gold(15 minutes)20141010064350

Gold gave up gains from a four-day rally on Friday and was headed for its best week in nearly four months as a slump in equities and growing worries over the global economy attracted safe-haven bids for the metal. Wall Street stocks slumped 2 percent on Thursday on anxieties about global economic growth, while oil prices fell to a two-year low. Recent data from the United States has pointed towards a strengthening economy, but disappointing data from Germany -Europe’s biggest economy – has investors worried about recession in the euro zone. Weakness in the dollar, which is poised to a snap a 12-week winning streak, also boosted bullion’s appeal. Investors tend to withdraw from non-interest-bearing assets to seek higher yields elsewhere when the dollar gains.

Holdings in SPDR Gold Trust, the world’s top gold-backed exchange-traded fund and a good proxy for investor sentiment, fell by 5.38 tonnes to 762.09 tonnes on Wednesday – the lowest since December 2008.

Brent Oil(15 minutes)20141010064416

The decline of the US dollar has helped support commodity prices but oil has seen no gain on the dollar’s decline. Brent crude prices rose by 0.2 percent yesterday but gave back gains this morning dropping 63 cents to trade at 88.40 and WTI crude prices declined by around 1.8 percent to reach 84.10 its lowest is numerous years as Europe’s worsening outlook and surging oil inventories hammered energy markets. Data showed Germany, Europe’s No. 1 economy, in August experienced its largest plunge in exports since the height of the financial crisis. In China, a Reuter’s poll forecast that soft domestic demand probably slowed imports, investment and retail sales to multi-month or multi-year lows in September. News showed that China is buying more oil, with a unit of state-owned PetroChina taking the equivalent of 17 cargoes of 500,000 barrels each of Middle Eastern sour crude over just six trading days this month.

 

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