Gold hits 17-year high in New York and Tokyo
Energy prices
declined after a number of reports forecast high prices are slowing global
demand. OPEC lowered its demand estimate for the 5th consecutive month. The
Energy Department and International Energy Agency also reduced forecasts earlier
this month. Record energy prices contributed
to the drop in consumer sentiment, as reported by the University of Michigan
survey.
Today’s Minerals Management report showed
shut-in oil production is equivalent to 56.06% of the daily oil production in
the Gulf Of Mexico, which is currently approximately 1.5 million barrels per
day. Approximately 35% of the oil shut-in is as a result of onshore
infrastructure problems. Today’s shut-in gas production is equivalent to 33.84%
of the daily gas production in the, which is currently approximately 10 billion
cubic feet per day.
Natural Gas -5.08% was the biggest
percentage decliner, followed by Heating Oil -4.23%, Crude Oil -2.84% and
Harbor
Unleaded Gas -0.99%.
The Department of Commerce released its
report on the U.S. current account deficit in the second quarter. The report
showed that the deficit narrowed compared to an upwardly revised first quarter
deficit.
The report showed that the current account deficit narrowed to $195.7 billion in
the second quarter from an upwardly revised $198.7 billion in the first quarter.
Despite the decrease, the deficit still ranked as the second highest on record.
Economists had expected the deficit to fall to $194.5 billion from the $195.1
billion deficit originally reported for the first quarter.
The Commerce Dept. said that the deficit amounted to 6.3 percent of the gross
domestic product in the second quarter. The deficit in the first quarter ran at
6.5 percent of GDP.
The nation’s trade deficit helped to keep the current account deficit near
record levels, representing about 90 percent of the shortfall. The trade deficit
rose to $173.3 billion in the second quarter from $173.1 billion in the first
quarter.
US treasuries greeted the news by
continuing yesterday’s decline, especially at the short end of the yield curve.Â
10yr T-Note -0.31%, 5yr T-Note -0.22% and 2yr T-Note -0.10%.
10yr yields are now at a 4-week high as inflation concerns continue to rise and
the deficit looks set to grow even further in the wake of hurricane Katrina.
Gold continued to surge, hitting a 17-year
high in Tokyo overnight and a 17-year high in New York today. Gold
+0.70%, Silver +2.97%, Palladium +3.37% and Platinum +0.45%
ended higher. Copper -0.72% was the only faller.
All the grain contracts (except Soybean Oil -0.76%) closed
higher after yesterday’s across the board decline. Soybeans +0.44%,
Wheat +0.46% and Corn +0.12%.
The softs were mixed, Lumber
-3.34% closed limit down, Coffee -2.33%, Cocoa
-1.42% and Frozen Orange Juice -0.26% closed lower. Cotton +0.55% and
Sugar +0.65% closed higher.
Livestock prices were also mixed, Pork Bellies +0.22%
closed higher, while Lean Hogs -0.04%, Feeder Cattle +0.62% and
Live Cattle +0.70% closed lower.
Economic News
Current Account:
Actual -$195.7 Bln Consensus -$194.5 Bln
University of Michigan Consumer Sentiment:
Actual 76.9 Consensus 85.0
Ashton Dorkins