Morgan Stanley Says Gold One Of The Least Desireable Metals

Asian markets are trading on a negative note ahead of the US Federal Reserve minutes today and concerns that global economic growth may worsen in future after International Monetary Fund (IMF) cuts the global growth forecast to 3.8 percent in 2015 from earlier estimates of 4 percent. This morning China’s HSBC Services Purchasing Managers’ Index (PMI) declined by 0.6 points to 53.5-mark in September as against a rise of 54.1-level in August.

Gold rose for a second session on Tuesday as its safe-haven appeal increased after the International Monetary Fund cut its global economic growth forecasts and weak German industrial data stoked further concerns. Gold is trading at 1213.30 up by just under $1.00 in the Asian sessions.  Gold prices on Tuesday were trading above $1200 retaining most of its sharp overnight gains following a bout of profit-taking in the dollar, but optimism over the U.S. economy and possibility of higher rates kept investors wary. More robust economic data could boost the dollar and reiterate expectations that the Federal Reserve would raise U.S. interest rates in mid-2015, a move that would hurt non-interest-bearing assets such as gold. Gold will extend losses into 2015 as the dollar’s strength hurts bullion, Morgan Stanley said, listing it as one of its least preferred metals.

On Tuesday, European markets are trading lower as German industrial production slid more than economists forecast. Asian markets ended mixed and US stock futures are trading in the red. German Industrial Production declined by 4 percent in August as against a rise of 1.6 percent a month ago. UK’s Manufacturing Production grew at slow pace of 0.1 percent in August as against a rise of 0.3 percent a month ago.

Silver gave back 20 points to trade at 17.220 this morning as markets reacted to weak Chinese data and lackluster German factory data. Platinum added $7.50 to trade at 1266.10.

Industrial metals remain in the red as Chinese traders returned after a week long holiday. Copper added 4 points to trade at 3.030. The downgrade by the IMF on Tuesday is weighing on the base metals family. Lower growth reduces implied demands. Copper prices were lower by 0.2 percent as uncertainty about the outlook for growth in top consumer China raised concerns about demand. However, sharp losses were cushioned as an influential Federal Reserve policymaker said he would be “delighted” to raise interest rates sometime next year since it would be a sign of economic success, but for now a “very accommodative monetary policy” is still needed. The IMF cut its global growth forecast for next year to 3.8 percent from 4 percent. Industrial production in Germany, the third-biggest user, fell 4 percent in September, data showed yesterday.