MADRID (MarketWatch) — Gold prices plunged below $1,300 an ounce to levels not seen in more than two years on Thursday, with investors stung after the Federal Reserve signaled it may reduce the amount of monetary stimulus it provides as early as this year.

“As a trader said to me a few minutes ago, it’s a bloodbath at the moment, with most technical support levels being broken, we could still see $1,280, then $1,265 being hit today,” said Austin Kiddle, director at Sharps Pixley, in emailed comments.

He said that while he thinks gold should consolidate next week and that July possibly could see a turnaround, “calling a bottom would be like trying to catch a knife.”

Losses piled up for gold during European trading hours. August gold futures (CNS:GCQ3)  sank $86, or 6.3%, to $1,288.60 an ounce in electronic trade. The contract is trading at levels not seen since September of 2010, according to FactSet data.

Futures prices turned lower after U.S. Federal Reserve Chairman Ben Bernanke on Wednesday said the central bank’s purchases of government bonds may be scaled back as early as this year, if economic activity improves in line with its forecasts.

The central bank is currently buying $85 billion a month of bonds in an effort to encourage economic growth. The central bank’s bond-buying program has helped bolster U.S. equity prices, and aggressive monetary easing in recent years has been credited for helping gold prices rally.

The “fundamentals look a little better to us, in particular the housing sector, which has been a drag on growth since the [financial] crisis, is now obviously a support to growth,” Bernanke said during a press conference after the conclusion of the Fed’s two-day policy meeting.

But if the economy “were really as strong as the messaging they’re sending, why not say, ‘We’re going to trim [monthly bond buying] back to $45 billion or trim this back to $60 billion?,” asked Scott Carter, chief executive of Lear Capital, a precious-metals retailer based in Los Angeles.

“We’re not getting any of that” from the Fed or from Bernanke, who, Carter said in a telephone interview, continued to deliver a “double message” to the markets on Wednesday.

U.S. equities tumbled after the Fed update, with the Dow Jones Industrial Average (DJI:DJIA)  losing 206 points to end at 15,112.19. U.S. stock futures pointed to heavy losses for Thursday’s session, as global markets tumbled and investors sought safety in the dollar.

The U.S. dollar (NYE:DXY) shot up in the wake of Bernanke’s comments, a negative development for gold as a stronger dollar can make gold and other dollar-denominated commodities more expensive to those using other currencies.

Before the Fed’s announcement, gold prices on the New York Mercantile Exchange settled higher by $7.10, or 0.5%, at $1,374 an ounce.

In the short term, Carter expects to see continued softening of gold prices, with technical resistance to any gains around $1,300 to $1,325 an ounce.

“We’ve got to sort through what the real economy is doing versus what the Fed is doing, and that will play itself out between now and the end of the year,” he said.

But looking out 12 to 36 months, “the story line is strong for gold and silver,” as debt continues to escalate worldwide, and as Europe and Japan grapple with their own economic issues, said Carter.

Even if the Fed were to cut bond purchases by half, “that’s still a lot of liquidity that’s being pumped into the market,” he said.

Copper moves lower

Elsewhere Thursday, copper prices for July delivery (CNS:HGN3)  fell 7 cents, or over 2%, to $3.07 a pound in electronic trade, with the industrial metal extending losses after HSBC’s China manufacturing survey showed activity was slowing in June.

The manufacturing Purchasing Managers’ Index fell to a nine-month low of 48.3, down from May’s final reading of 49.2. A reading below 50 indicates contraction.

July silver (CNS:SIN3)  sank $1.85, or 8.6%, to $19.77 an ounce, and July platinum (NMN:PLN3)  slumped $30.70, or 2.2%, to $1,393.20 an ounce.

September palladium (NMN:PAU3)   lost $21.40, or 3%, to $675.30 an ounce. The contract on Wednesday closed Nymex floor trading below $700 an ounce for the first time since May 8, according to FactSet data.

http://blogs.marketwatch.com/thetell/2013/06/05/sp-500-sinks-4-off-may-highs-worst-retreat-of-year/

Facebook FB +0.05%  shares have now fallen roughly 20% since the social network reported results May 1.

Two upbeat broker notes published this week –- one from Goldman Sachs and another from Piper Jaffray –- didn’t do much for the stock which is still down nearly 5% this week, and was last trading down about 2.4% to $22.96 by midday Wednesday.

What’s going on?

Piper Jaffray analyst Gene Munster pointed to two factors. One is investor expectation that Facebook’s ad growth rate will slow down in June “based on the slowing trajectory reported in the first quarter.” The other is the rising worry that teenagers are getting tired of the social network.

“There have been an increasing number of reports suggesting Facebook’s momentum among teens is slowing,” Munster wrote, citing Piper Jaffray’s own survey. Munster recalled that Facebook executives last month noted that “social is not a zero sum game” and that overall time spent sharing content online continues to grow.

“While we agree with this sentiment, we also believe there is a natural limit to the amount of time an average user will ultimately spend with social platforms throughout the day, thus we believe the platform of choice remains an important topic,” Munster wrote.

Speaking at the D11 conference last week, Chief Operating Officer Sheryl Sandberg also downplayed the concern about Facebook’s teen users.

“Teenager are using other things more. At the same time, they continue to be very active engaged Facebook users,” she said.

Goldman Sachs reaffirmed a buy rating on Facebook on Wednesday. The reason: Facebook’s momentum in mobile. The company reported that revenue from mobile ads now make up roughly a third of its total ad revenue. “We continue to believe Facebook is at the center of the mobile ad revolution,” Goldman analyst Heather Bellini said in a note.

Goldman Sachs has $40 price target for Facebook, or two bucks above Facebook’s initial public offering price of $38. The stock is still roughly 40% down from that level.

- Benjamin Pimentel

Follow Benjamin Pimentel on Twitter @benpimentel

NEW YORK (MarketWatch) — Gold futures slumped on Friday for a seventh consecutive session, as the dollar index jumped to nearly three-year highs and U.S. data raised optimism about the economic recovery.

Gold for June delivery (CNS:GCM3)  settled down $22.20 to $1,364.70 an ounce on the New York Mercantile Exchange. The metal has fallen by $109 in the last seven sessions, with gains for U.S. stocks and the dollar among the factors that have curbed gold’s attraction for investors.

“Over the last week, you’ve had an appreciating dollar, so I think that’s weighed on gold prices,” said Carlos Sanchez, director of asset management at CPM Group.

Dollar strength weighs on dollar-denominated commodities such as gold since it makes them more expensive for other currency holders.

Data released Friday gave the dollar a boost. The University of Michigan/Thomson Reuters consumer-sentiment index jumped to 83.7 in May from 76.4 in April, far above what economists expected. And, the Conference Board’s leading economic index rose a stronger-than-expected 0.6 points to 95 in April.

The ICE dollar index (NYE:DXY) , which measures the greenback’s movement against six other major currencies, neared a three-year high on Friday, rising to 84.249. That’s up from 83.758 in North American trade late Thursday.

The dollar got a boost on Thursday after San Francisco Federal Reserve President John Williams said that the Fed could slow its $85 billion-a-month bond-buying program as soon as this summer if the economy expands in line with his forecasts.

Williams doesn’t have a vote this year on the Federal Open Market Committee, but he is among a chorus of Fed officials this week calling for a slowdown in the program. Gold is hurt by any talk that the Fed might stop quantitative easing, which tends to weaken the dollar and make gold stronger.

On Thursday, news of a deeper-than-forecast drop in consumer prices for April also cut into gold’s traditional appeal as a hedge against inflation.

Constant outflows from gold-backed exchange-traded funds have also undermined gold. Shares in the SPDR Gold Trust (NAR:GLD)  are down nearly 6% for the week and almost 15% quarter to date.

“Prices had been caught between breakneck ETP [exchange-trading product] outflows and strength in physical demand. ETP outflows have shown little sign of slowing,” wrote analysts at Barclays in a note.

“As we enter the period beyond seasonal demand, gold prices are likely to find reduced support from the physical market and are exposed to further downside risk in the near term. We maintain our second-quarter 2013 average gold price forecast at $1,350/oz,” the Barclays analysts added.

Gold will get ‘crushed’

Some investors are getting increasingly bearish on gold.

Ric Deverell, head of commodities research at Credit Suisse Group AG, predicted that gold will be trading at $1,100 an ounce in a year and below $1,000 in five years.

“Gold is going to get crushed,” Deverell told reporters in London on Thursday, according to a report by Bloomberg News. “The need to buy gold for wealth preservation fell down and the probability of inflation on a one-to-three-year horizon is significantly diminished.”

He was also dismissive of a surge in demand for gold bars, coins and jewelry, saying that would be temporary. The World Gold Council has said that first-quarter total world gold demand fell 13% from the same period a year ago, but demand for jewelry, bars and coins increased.

“This is bargain-buying,” he said. “It’s like when you have cash for clunkers in autos, you bring forward activity, but it’s not a massive addition to buying.”

As gold tumbled, other metals followed. July silver (CNS:SIN3)  fell 31 cents to $22.35 an ounce.

June palladium (NMN:PAM3)  fell 50 cents to $740.25 an ounce and July platinum futures (NMN:PLN3)  shed $17.60 to $1,468 an ounce.

Copper was an exception. July copper (CNS:HGN3)  tacked on 3 cents to $3.32 a pound. “In the case of copper, we think there is further upside to the recent short-covering, given positive demand signals from China and market positioning that is still short,” said Barclays analysts.

By Saumya Vaishampayan and Barbara Kollmeyer, MarketWatch

Dow reaches closes at 15, 056 as S&P 500 also hits record
Major U.S. indices have now made up all their losses from financial crisis

In a major boost for the global economy, the Dow Jones Industrial Average closed above 15000 points for the first time on Tuesday.

Ending the day 87 points up on Monday, the Dow closed up 0.6 percent to 15,056.20 - the latest landmark in a near four-year rally which has seen the stock market rise 130 percent.

The historic gains will fuel growing confidence in the U.S. economy, but the Federal Reserve is not expected to relax its policy of keeping interest rates at almost zero - seen by many as a key supporting factor in the rise of the Dow.

Record: The Dow Jones Industrial Average today reached its highest ever level at 15,013

Analysts have attributed the steady rise of the NYSE to investors fear of missing out on the rally replacing their concerns about the risk of a sell off.

Earlier today, the stockmarket hit new highs as the Dow passed a record-breaking 15,000.

The index, which tracks the value of 30 of the biggest American companies, smashed through 15,000, before falling back slightly.

The S&P 500 also reached its highest level ever as the prolonged stock rally showed no sign of slowing down despite the struggling global economy.

The S&P has risen for three straight days, increasing more than 13 per cent so far this year - more than in the whole of 2012.

Yesterday it closed at a record high of 1,617, and today reached an intraday high of 1,620.

The strong performance of equities in recent days has been attributed to last week's strong employment figures from the U.S., as well as the Federal Reserve's stimulus program.

Healthy profits at major U.S. corporations are also driving the market higher.

More than 80 per cent of companies in the S&P 500 have reported their first quarter-earnings, and profits are at a record level.

owever, revenues have been less promising as gross sales have falled short of expectations so far this year.

The Dow, which is up more than 14 per cent this year, first passed 15,000 on Friday, but has still never closed above that level in any given day.

Both of the main indices have been setting a series of records after regaining all of the losses they suffered in the 2008 financial crisis.

Recent gains have been especially strong in technology and banking, which tend to rise or fall sharply in sync with the overall health of the global economy.

Another good sign for the global economy is that the price of ultra-safe assets such as U.S. government bonds has been falling, showing investors are ready to take more risks with their money.

However, renewed turmoil in the eurozone and the risk of U.S. government shutdown could yet shake world market in the months to come. 

http://www.dailymail.co.uk/news/article-2320776/Dow-Jones-closes-15-000-time-fueling-growing-confidence-world-economy.html