Gold falls as investors favour stocks

GOLD futures settled at less than $US1,600 for a second time in three trading days Thursday as brighter economic data and stronger equities bolstered investor risk appetite.

The most actively traded contract, for June delivery, fell $US11.40, or 0.7 per cent, to settle at $US1,594.80 a troy ounce on the Comex division of the New York Mercantile Exchange.

Gold prices started the day on the back foot, after an upwardly revised reading of US fourth-quarter growth bolstered investor confidence in the economic recovery.

Gold is considered a refuge from economic uncertainty and a means of safeguarding wealth, but tends to fall out of favor with investors when they expect the economy to do well.

Gold prices also faced pressure from an upbeat US equity market.

The record-breaking run up in equities had cast a shadow on gold in recent months, as investors pulled money out of the haven asset in favor of the economically sensitive stock market.

Still, a weaker reading of the Chicago Business Barometer, a gauge of Chicago-area manufacturing activity, helped temper some of gold's declines.

"That came in quite a lot below expectations and we had a little bounce (in gold)," said Bart Melek, head of commodity strategy with TD Securities.

Lingering concern over Cyprus also cushioned gold's losses. Gold futures had jumped up above $US1,600 on Wednesday as some investors had feared a bank run as Cypriot banks reopened for the first time in nearly two weeks after the nation's controversial bailout.

Cyprus had agreed to shut its second-largest bank and force large depositors to take losses as part of a deal that provided the government with EUR 10 billion ($13 billion) in rescue financing.

Gold's losses came amid unusually low trading volumes, as many traders in the US and Europe moved to the sidelines ahead of the Good Friday holiday. The Comex floor will closed Friday.

Price movements can be amplified during low volume trade, as each individual transaction has a greater impact on the market.

Settlements (ranges include open-outcry and electronic trading):

London PM Gold Fix: $1,598.25; previous PM $1,603.00

Jun gold $1,594.80, down $11.40; Range $1,593.80-$1,606.60

May silver $28.323, down 28.9 cents; Range $28.170-$28.810

Jul platinum $1,574.60, down $8.90; Range $1,561.90-$1,589.90

Jun palladium $768.25; down 5 cents; Range $760.95-$775.45

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Gold falls as investors favour stocks

GOLD futures settled at less than $US1,600 for a second time in three trading days Thursday as brighter economic data and stronger equities bolstered investor risk appetite.

The most actively traded contract, for June delivery, fell $US11.40, or 0.7 per cent, to settle at $US1,594.80 a troy ounce on the Comex division of the New York Mercantile Exchange.

Gold prices started the day on the back foot, after an upwardly revised reading of US fourth-quarter growth bolstered investor confidence in the economic recovery.

Gold is considered a refuge from economic uncertainty and a means of safeguarding wealth, but tends to fall out of favor with investors when they expect the economy to do well.

Gold prices also faced pressure from an upbeat US equity market.

The record-breaking run up in equities had cast a shadow on gold in recent months, as investors pulled money out of the haven asset in favor of the economically sensitive stock market.

Still, a weaker reading of the Chicago Business Barometer, a gauge of Chicago-area manufacturing activity, helped temper some of gold's declines.

"That came in quite a lot below expectations and we had a little bounce (in gold)," said Bart Melek, head of commodity strategy with TD Securities.

Lingering concern over Cyprus also cushioned gold's losses. Gold futures had jumped up above $US1,600 on Wednesday as some investors had feared a bank run as Cypriot banks reopened for the first time in nearly two weeks after the nation's controversial bailout.

Cyprus had agreed to shut its second-largest bank and force large depositors to take losses as part of a deal that provided the government with EUR 10 billion ($13 billion) in rescue financing.

Gold's losses came amid unusually low trading volumes, as many traders in the US and Europe moved to the sidelines ahead of the Good Friday holiday. The Comex floor will closed Friday.

Price movements can be amplified during low volume trade, as each individual transaction has a greater impact on the market.

Settlements (ranges include open-outcry and electronic trading):

London PM Gold Fix: $1,598.25; previous PM $1,603.00

Jun gold $1,594.80, down $11.40; Range $1,593.80-$1,606.60

May silver $28.323, down 28.9 cents; Range $28.170-$28.810

Jul platinum $1,574.60, down $8.90; Range $1,561.90-$1,589.90

Jun palladium $768.25; down 5 cents; Range $760.95-$775.45

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Investors cash in wiping $24 billion in sell-off

Beware of the latest share-buying spree Source: Supplied

TWENTY-FOUR billion dollars has been wiped off the value of Australia's top 200 companies today as investors cashed in on the stellar run.

Yesterday global markets soared after the Dow Jones reached five-year highs and local shares hovered around the 5100 mark.

But today the table turned as investors cashed in on profits.

The ASX200 closed down 118.6 points, or 2.33 per cent, lower at 4,980.1 while the broader All Ordinaries index was down 115.8 points, or 2.26 per cent, at 4,998.6 - wiping about $36 billion off Australian shares today.

"At some point there is going to be some profit-taking, " said Savanth Sebastian of CommSec. "If the market kept going the way it was going it would be up 68 per cent since the beginning of the year which isn't feasible."

A couple of triggers sparked today's sell-off which was the market's largest one-day decline in nine months.

Firstly, commodity prices tumbled overnight. This was due to rumours of a big commodity hedge fund in the US going into liquidation.

"This [rumour] leads to a slide in commodity prices and hits the big energy and material stocks," said Mr Savanth.

Gold stocks were heaviest hit, tumbling 4.38 per cent and materials stocks dropped 3.33 per cent.

Secondly, the unresolved issue of the "fiscal cliff" in the US which has been postponed from December 31 until March 1 is looming and weighing on the market.

"On 1 March $85 billion worth of tax cuts need to happen in the US unless they pass a new bill. That's also in the back of investors' minds." said Mr Savanth.

Overnight US stocks closed sharply lower after the Federal Reserve released minutes from its latest monetary policy meeting showing officials were split over its asset-purchases programs.

The Dow Jones was down 108.13 points (0.77 per cent) at 13,927.54 after reaching five-year highs the day before.

Miners and financials tumble
BHP Billiton lost $1.48, or 3.83 per cent, to $37.17, Rio Tinto slipped $2.09, or 3.01 per cent, to $67.30 and Fortescue Metals dipped 12 cents, or 2.44 per cent, to $4.80.

The spot price of gold in Sydney was $US1,561.20 per fine ounce, down $US46.17 from Wednesday's closing price of $US1,607.37 per ounce.

ANZ eased 76 cents to $27.98, CBA tumbled $2.04 to $64.81, NAB was $1.14 lower at $29.42 and Westpac fell 86 cents to $29.49.

A rare positive was Qantas, whose shares gained 4.5 cents, or 2.79 per cent, to $1.66 after posting first half net profit of $111 million, more than double the $42 million achieved in the prior corresponding period.

Preliminary national turnover was 1.9 billion securities worth $6.8 billion, with falling stocks outnumbering rising stocks by more than three to one.

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Investors on a roll as Wall St hits 5-year high

Traders work on the floor of the New York Stock Exchange. AFP PHOTO/STEPHEN CHERNIN Source: AFP

THE Australian market has opened firmer as Wall Street rallied to fresh five-year highs.

At 10.27am, the benchmark S&P/ASX200 index was up 11.7 points, or 0.23 per cent, at 5,093.6 points, while the broader All Ordinaries index was up 9.4 points, or 0.18 per cent, to 5,110.4 points.

On the ASX 24, the March share price index futures contract was up 13 points at 5,073 points, with 8,719 contracts traded.

Bell Direct equities analyst Julia Lee said the Australian market had rallied on the back of the US market reaching fresh five year highs.

"Investors are rolling with the momentum, it's hard to fight," she told AAP.

"The Australian market is looking very strong, we're in the fifth consecutive week of gains."

The big banking stocks were driving the surge in the Australian market, while resources stocks were under pressure from falling commodity prices, such as copper.

BHP Billiton shares were 22 cents, or 0.56 per cent weaker, to hit $38.78 at 1039 AEDT after chief executive Marius Kloppers announced he would retire from the role in May.

The announcement came as the global resources giant posted a 58 per cent fall in first half profit to $US4.24 billion ($A4.14 billion) due to lower commodity prices and a weak US dollar.

Mr Kloppers is to be replaced by the 56-year-old head of BHP's non-ferrous business, Andrew Mackenzie.

Woodside shares dipped 21 cents, or 0.55 per cent, to $38.12, despite announcing a 98 per cent lift in full-year net profit to $US2.98 billion ($A2.89 billion) for the 2012 calendar year, from $US1.5 billion ($A1.46 billion) in 2011.

Meanwhile, Seven West Media shares have fallen 19 cents, or 7.54 per cent, to $2.34 after it announced a loss of $109.3 million for the first half of the financial year because of restructure costs and the lower value of its magazines.

Suncorp Group shares have fallen four per cent, or 47 cents, to $11.20 after the insurer's posted a first half profit increase of 48 per cent because of lower insurance claims and stronger financial markets in the six months to the end of December.

Suncorp made a net profit of $574 million in the six months to December 31, up from $389 million in the previous corresponding period.

Of the big banks, the Commonwealth Bank of Australia was 43 cents, or 0.65 per cent higher, at $68.48 at 1043 AEDT.

Wall Street closed firmer, with the Dow Jones Industrial Average gaining 53.99 points, 0.39 per cent, to reach 14,035.75, its best level since October 12, 2007.

The broad-based S&P 500 rose 11.12 points, or 0.73 per cent, to 1,530.91 - its strongest level since October 31, 2007 - and the tech-rich Nasdaq Composite increased 21.56, 0.68 per cent, to 3,213.59.

National turnover at 1037 AEDT was 231.9 million securities worth $636.7 million.

Dow hits five-year high

The Dow Jones Industrial Average and the S&P 500 rose to their best levels in more than five years.

The US markets kept alive a rally in Europe, where shares rose in all the main exchanges helped by news of soaring investor sentiment in Germany.

Also sparking trade were reports of another possible big merger, of office supply retailers Office Depot and OfficeMax.

Fresh merger-and-acquisition reports after last week's big merger of American Airlines and US Airways, and the Berkshire Hathaway-3G Capital takeover of Heinz, gave a spark to trade.

Local shares break four-year high yesterday
Yesterday the Australian share market closed at its highest level in more than four years, with reporting season delivering mostly positive results.

The benchmark ASX 200 index had lifted 18.5 points, or 0.37 per cent, to 5081.9 points, while the broader All Ordinaries index had added 18.1 points, or 0.36 per cent, to 5101 points.

The ASX 200 closed at its highest level since September 2008.

RBS Morgans senior private client adviser Bill Chatterton said there had been gains across all the sectors, with the materials sector performing particularly well.

"We're right in the middle of reporting season and, so far, we've had some disappointments in the odd one, but on balance, it's been reasonably good," he said.

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