Home Data, Durable Goods Lift Metals, But Dollar Also Gains, Which ...

Tag : base metals

BY REUTERS
Posted 7/25/2008
A gain in the dollar on reports showing better-than-expected homesales and orders for long-lasting goods hurt oil and gold pricesearly on Friday, but the improved growth prospects implied by thedata helped prices of base metals used in manufacturing and homebuilding.
Later, investors drove gold higher when they chose the yellow metalas an alternative to falling equities.
Selling of financial shares increased after Standard & Poor's saidit may cut debt and preferred stock ratings of housing financeagencies Fannie Mae and Freddie Mac.
The news sent the Dow Jones industrial average and the Standard &Poor's 500 Index into negative territory shortly before Comex goldclosed.
Investors sometimes turn to gold as an alternative to financialinstruments, especially in times of uncertainty.
August gold settled $4.50 higher at $926.80 an ounce.
Crude oil futures dropped 1.78% by the close, pressured by astronger dollar after release of several upbeat economic gauges andan industry consultant's forecast for higher OPEC oil output thismonth.
On the New York Mercantile Exchange, September crude oil fell $2.23to finish at $123.26 a barrel.
"The rise in U.S. durable goods orders pushed the dollar up and thePetrologistics estimate of OPEC output rising both helped pull downcrude futures," said Phil Flynn, analyst with Alaron Trading.
Industry consultant Petrologistics said it sees a200,000-barrel-per-day rise in OPEC production for July.
Orders for durable manufactured goods went up in June on demand formetals, machinery, electrical equipment and military needs, agovernment report showed.
"The overall pattern of business investment in the U.S. is holdingup pretty well. These numbers have been good for quite some time .. . and not indicative of the levels that you would normallyassociate with a recession," said Shaun Osborne, chief currencystrategist at TD Securities in Toronto.
Later, consumer sentiment came in higher in July, up from a 28-yearlow last month and data from the struggling housing marketcontributed to a brighter outlook. New-home sales fell less thanexpected in June and inventories of homes for sale fell to a 31/2-year low.
The improved data lifted base metals, triggering a rebound in U.S.copper futures from the six-week low hit on Thursday.
The red metal is a key material in home construction, and copperfor September delivery gained 2.80 cents on the New York MercantileExchange's Comex division to close at $3.5770 a pound.
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