Bush is a disaster. Gold falls back as war concerns ease
By Myra P. Saefong, CBS.MarketWatch.com
Last Update: 2:07 PM ET March 3, 2003
NEW YORK (CBS.MW) -- Turkey's refusal to allow the U.S. to base troops on its soil and Iraqi leader Saddam Hussein's efforts to comply with U.N. disarmament demands eased the threat of an immediate war with Iraq, pulling gold back under $350 Friday.
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Gold for April delivery closed at $349.30 an ounce on the New York Mercantile Exchange, down $1 after falling to a low at $345.20 an ounce earlier in the session.
Turkey rejected the U.S. proposal on Saturday, forcing the U.S. to rethink its plan to base 62,000 U.S. soldiers on Iraq's northern border. See Special Report: Countdown to War.
Additionally, Iraq has said it's destroying its al-Samoud 2 missiles and planned to hand over a report about its unilateral destruction of anthrax and VX nerve agent in accordance with U.N. demands.
"Once you get past the war concerns, the general gold set-up is less bullish," said Grady Garrett, chief trading strategist at EnergyTrendAlert.com, a commodity information provider.
"The global economic recovery is sputtering under the weight of dramatically higher oil prices and some 'holding back' on purchase commitment decisions," he said.
In more upbeat economic news Monday, data on U.S. manufacturing revealed an expansion for a fourth-straight month, "suggesting business spending is picking up," said TheBullionDesk.com analyst James Moore. See full story.
But even aside from global geopolitical and economic concerns, gold prices could be poised to move higher because production of the precious metal is falling, just at time when demand is rising, Leonard Kaplan, president of Prospector Asset Management told clients Monday.
"This is, long term, quite bullish," he said.
Against this backdrop, U.S. stocks saw mixed trading. See Market Snapshot.
Metals shares decline
In the equities arena, major metals shares traded mostly to the downside, mirroring gold's move lower.
In recent dealings, the Philadelphia Gold & Silver Index ($XAU: news, chart, profile) traded down 2.2 percent at 70.38, the Amex Gold Bugs Index (HUI: news, chart, profile) declined by 2.2 percent to 129.28 and the CBOE Gold Index ($GOX: news, chart, profile) fell 2.2 percent to 58.41.
Among index components, shares of Barrick Gold (ABX: news, chart, profile) shed 17 cents to $15.95, Newmont Mining (NEM: news, chart, profile) eased back by 41 cents to $26.88 and Placer Dome Gold (PDG: news, chart, profile) fell by 27 cents to trade at $9.56. Harmony Gold (HMY: news, chart, profile) shares also declined 73 cents to stand at $13.48.
Many gold mining companies are undervalued, however, with investors treating them as if the price of spot gold was 10 percent lower than it actually is, analysts told CBS.MarketWatch.com's Thom Calandra. Read StockWatch.
Elsewhere, platinum and palladium miner Stillwater Mining (SWC: news, chart, profile) traded at $2.46, up 12 cents on the session.
Silver finds support
In other Nymex metals action, March silver climbed 7.2 cents to close at $4.657 an ounce, defying the declines in gold.
The strong U.S. manufacturing data provided support for silver, said TheBullionDesk.com's Moore, but prices for the industrial metal remain "firmly locked" in its $4.50 to $4.70 trading range.
Moore expects silver to remain in its trading range "until the outcome of the Iraq situation has been decided once and for all."
Elsewhere, palladium for June delivery closed down $4.80 at $238.15 an ounce, retreating for a third-straight session. The April platinum contract fell to $673.50 an ounce, down $1.
Among other industrial metals, May copper closed at 79.25 cents a pound, up 1.15 cents, while May aluminum rose 0.3 cent to 67.7 cents a pound.
As for supplies, Nymex gold inventories were at 2.26 million troy ounces late Friday, down 716 troy ounces from the previous session.
Silver inventories were up 1.02 million troy ounces at 109.1 million troy ounces, while copper stocks fell 1,250 short tons to 374,707 short tons.
Myra P. Saefong is a reporter for CBS.MarketWatch.com in San Francisco |
