Gold led declines by commodities and the dollar strengthened for a sixth day as better-than expected U.S. economic data supported the case for the Federal Reserve to pare monetary stimulus. Most Asian stocks rose, while those in Shanghai slipped.
Cash bullion dropped 2.3 percent to $1,248.50 an ounce at 12:14 p.m. in Tokyo, heading for its worst quarterly performance since at least 1920 with a 22 percent plunge. Silver sank 3.9 percent and crude dropped 0.6 percent in New York. The MSCI Asia Pacific Index (SPGSCI) climbed 0.4 percent, while the Shanghai Composite Index slid 1.2 percent to its lowest level since January 2009. Standard & Poor’s 500 Index (SPX) futures dropped 0.4 percent. The Dollar Index reached a three-week high, while the won gained 0.4 percent.
Data in the U.S. showed durable goods bookings climbed in May and house prices, new-home sales and consumer confidence beat economists’ estimates, almost a week after the Fed said an improving economy could spur reductions in monetary stimulus. Shares in Shanghai fell as the central bank’s pledge to stabilize money markets failed to ease concern that elevated funding costs will curb economic growth.
“The raft of figures that came out of the U.S. all pointed to a stronger growth pattern, which pushed the U.S. dollar higher,” David Lennox, an analyst at Fat Prophets, said by phone from Sydney. “That’s two nails in the coffin for gold: a stronger U.S. dollar and expectations that quantitative easing will be scaled back.”
Bullion is 25 percent lower this year after 12 years of gains, entering a bear market in April, as investors lost faith in the metal as a store of value. Assets in the SPDR Gold Trust, the largest bullion-backed exchange-traded product, are down 28 percent this year, wiping out $34 billion in the value of the fund.
Cash silver traded at $18.884 an ounce, 33 percent lower this quarter. The metal is the worst performer this year on the Standard & Poor GSCI Spot Index of raw materials. Spot platinum fell 2 percent and palladium dropped 1.2 percent. Copper, nickel and tin lost more than 1 percent.
Crude declined to $94.70 a barrel after an industry report showed stockpiles in the U.S. remained near the highest level in more than 30 years.
About five stocks rose for every three that fell on MSCI’s Asian gauge, as financial companies and material producers rallied. Health-care shares declined. Japan’s Topix Index (TPX) slid 0.9 percent. Australia’s S&P/ASX 200 Index (AS51) rose 1.2 percent.
Chinese equity gauges were mixed. Declines on the Shanghai Composite took its six-day drop to 11 percent. The Hang Seng China Enterprises Index climbed 1.6 percent in Hong Kong from the lowest level since October 2011.
The People’s Bank of China has provided liquidity to some financial institutions to stabilize money-market rates, according to a release yesterday. The statement is the first public confirmation of central bank action to ease a crunch that sent the overnight repurchase rate to a record last week. Premier Li Keqiang is seeking to wring speculative lending out of the banking system after credit expansion outpaced economic growth.
“Concern about the impact of the cash crunch on the real economy still lingers among investors and the government’s deleveraging among the financial system isn’t likely to come to an end after the capital injection,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million.