Gold prices tumbled today as a stronger U.S. dollar prompted broad-based selling across the commodities sector, and better macroeconomic sentiment could further decrease safe-haven buying in the metal. Zachary Oxman, managing director with California-based TrendMax Futures, said investors took profits on the last day of the quarter following a period of solid gains across the commodities group. Gold and gold receivables held by euro zone central banks fell by 96 million euros ($136 million) to 240.629 billion euros in the week ending June 26, as per the European Central Bank. Net foreign exchange reserves in the Eurosystem of central banks fell by 0.3 billion euros to 216.6 billion euros. The prices of precious metals fell as the dollar gained strength after an unexpected drop in U.S. consumer confidence data.
China’s manufacturing index expanded for a fourth month as a 4 trillion yuan ($585 billion) stimulus plan and record bank lending done to revive the world’s third-largest economy. China’s economy is expected to keep on improving in the third and fourth quarters also, enabling the nation to meet its 8% economic growth target for this year, as per the central bank Governor Zhou Xiaochuan. This sought of growth in China is expected to increase their domestic spending which will increase their manufacturing activity. Prices of copper have shown their biggest six-month gain in 22 years as Chinese buyers boost imports to records to replenish stockpiles.
The Reuters/Jefferies CRB index of commodities prices dropped nearly 2 per cent, led by a sharp decline in crude oil futures. Nigeria supply snags and economic recovery optimism had recently helped push crude oil prices higher. However, the gains in the prices vanished in the evening after the dollar started to show an increase against the major currencies of the world. The American Petroleum Institute, in a report said that domestic crude stocks fell 6.8 million barrels, to 349.7 million barrels last week. This sought of drawdown is extremely bullish for crude oil although the EIA crude inventories are due to release on Wednesday which is expected to give a clear picture about the movement in oil for the coming days.
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