LONDON, 16 September 2005 — Gold prices hit the highest point for 17 years in New York trading yesterday, owing to forecasts of higher inflation, analysts here said. On the Comex, a division of the New York Mercantile Exchange, gold for December delivery rose to $459.20 per ounce — the highest level since June 1988. Later the same day it stood at $458.20.
On the London Bullion Market, the price of an ounce of gold rose to as high as $455.20 per ounce, the highest level for nine months. “We’ve got consistently high oil prices and high other commodity prices, so the investment community is of the opinion that inflation over the longer term is likely to rise,” said Ross Norman, an analyst at the specialist website TheBullionDesk.com. “Although the dollar and geopolitical tensions have been the story (regarding gold) over the last twelve months, the attention is shifting steadily onto inflation figures,” he said.
US stocks turned lower yesterday after a regional manufacturing report showed signs of slower growth, triggering declines in economically sensitive stocks like Caterpillar Inc. Shares of Caterpillar slid more than 1 percent to $57.62 on the New York Stock Exchange. The Federal Reserve Bank of Philadelphia said its index of business conditions in the US Mid-Atlantic region fell in September to 2.2 from 17.5 in August. Wall Street analysts expected the index to come at 14. The report “indicates the economy is slowing,” said Barry Hyman, equity market strategist at Ehrenkrantz, King, Nussbaum, adding that it may prompt the Federal Reserve to pause in its campaign of interest rate hikes this year.
The Dow Jones industrial average was down 19.43 points, or 0.18 percent, at 10,525.47. The Standard & Poor’s 500 Index was down 1.97 points, or 0.16 percent, at 1,225.19. The technology-laced NASDAQ Composite Index was down 5.86 points, or 0.27 percent, at 2,143.47.
Asian stocks closed mostly lower yesterday as a fresh spike in oil prices and further losses on Wall Street hit sentiment but Tokyo once again bucked the trend as ever more confident investors pushed the Nikkei to just short of the key 13,000 points level, dealers said in Hong Kong. They said the rise in oil prices after the latest US stockpiles data undercut optimism that slower demand might keep prices down.
At the same time, the tone was increasingly cautious ahead of next Tuesday’s US Federal Reserve meeting, when most now believe interest rates will be hiked by another 25 basis points rather than left on hold to make allowance for Hurricane Katrina.
On the day, Tokyo put on 1.19 percent, helped by comments from central bank officials that deflation could be squeezed out of the system soon, allowing a return to financial normality after years of false starts since the bursting of the “bubble” economy in the early 1990s.