Great day for equities in New York, a lousy day for gold bugs which the metal copping a whack from complacent investors.
A year after the so-called ‘taper tantrum’ sparked the sell off in emerging markets, and some commodities, led by gold, the Standard & Poor’s 500 hit another all time high during trading overnight, and gold prices suffered a surprise slide to levels not seen since earlier in the year.
It was a timely reminder that the low volatility and moderate conditions has a different impact in different markets.
Gold futures prices in New York fell to three and a half month lows, but the US sharemarket powered ahead as tech stocks and small caps moved back into favour with investors.
But it should be pointed out that the equity markets are not strong – volumes are low or falling and investor interest isn’t really strong at all.
The Aussie dollar fell half a cent overnight to around 92.30 US cents, then recovered past 92.50.
Our market will open with a small gain according to the overnight futures market, but volumes will again be low, as they are elsewhere.
But gold stocks, led by Newcrest will cop a whack from the overnight slide in the price of the metal.
Comex gold futures for June delivery fell $US26.20, or 2%, to settle at $US1,265.50 an ounce in New York.
That was the lowest since February 7 (the gold price hit its 29014 high of around $US1400 an ounce in March).
The session’s point and percentage losses were also the largest since mid-April.
Analysts pointed out there’s a solid support level around $US1,262 for gold and if that’s breached, gold could fall closer to the $US1,200 mark.
In early Asian trading, gold was down to just over $US1,256 an ounce.
But Comex July silver outperformed gold in that it only fell lost 35 cents, or 1.8%, to end at $US19.07 an ounce. That was the lowest for a most-active futures contract for four weeks.
But Comex copper futures closed up a cent, or 0.3%, at $US3.18 a pound, which means there has been a small rise in the price over the past three weeks – contrary to some earlier forecasts.
Indicating that tech and small cap stocks are moving back into favour, the Nasdaq Composite ended the day up a strong 51.26 points, or 1.2%, at 4,237.07.
Marketwatch.com said that high-growth biotechnology stocks also rallied, with the iShares Nasdaq Biotechnology ETF rising 2.5%.
Apple hit yet another 52 week high of $US625.63, up 1.9%. That was actually the highest price since August 2012.
Facebook shares jumped 3.4% and Linked in shares were up 3% as the popular big tech momentum stocks also moved back into favour.
The S&P 500 closed near session highs, after hitting an intraday record. The benchmark index gained 11.38 points, or 0.6%, to 1,911.91.
And the Dow added 69.23 points, or 0.4%, to 16,675.50.
The Russell 2000 index, which covers small cap stocks, rose 15.96 points, or 1.4% to 1,142.15.
