AP News, May 31st, 2007
Gold prices rose Thursday as the U.S. dollar fell in response to the government's weaker than expected first-quarter gross domestic product report.
Elsewhere in the commodities markets, industrial metals and agriculture prices climbed while energy prices retreated.
The gold market reacted to a falling dollar, which lost ground to other major currencies amid concerns about sluggish growth in the U.S.
The Commerce Department slashed its estimate of first-quarter GDP to 0.6 percent from an earlier estimate of 1.3 percent, below economists' average forecast for 0.8 percent growth. Slower-than-expected growth in the U.S. has raised some analysts' expectations that the Fed will cut interest rates this year, although forecasts for the Fed's next move remain mixed.
"Gold and metals will be the beneficiary if the Fed cuts rates, which will make the dollar weaker," said Neal Ryan, commodities analyst with New Orleans-based bullion dealer Blanchard & Co.
An ounce of gold gained $6.60 to $659.70 by midday on the New York Mercantile Exchange. Silver edged up 27.5 cents to $13.495 an ounce.
Meanwhile, industrial metals prices firmed in early trading on the London Metal Exchange.
In the energy markets, gasoline futures fell after the government reported a larger-than-expected increase in inventories for the week ended May 25. The Energy Information Administration reported the nation's gasoline stockpiles built by 1.3 million barrels, while crude oil inventories shrank by 2 million barrels.
The June contract for gasoline, which expires Thursday, shed 5.41 cents to $2.2184 a gallon on Nymex. Light, sweet crude for July lost 42 cents to $63.07 a barrel.
In Chicago, agriculture products extended their sharp gains from a day earlier. July corn added 9.25 cents on the Chicago Board of Trade to $3.915 a bushel. Soybeans picked up a penny to $8.0925 a bushel, while wheat gained 7.5 cents to 5.1825 a bushel.
"Wheat is not worth 30 cents more than it was two days ago, but it's a thinner-trading market and it's prone to have these big swings," said DTN analyst Gary Wilhelmi. He attributed this week's volatility in part to heavy fund buying and selling.
