Precious metals fall; Inflation Concerns Ease as Commodities Drop

Gold and silver fell after a decline in commodity prices reduced demand for precious metals as a hedge against inflation. Other non-metal commodities also dropped.

The Reuters/Jefferies CRB Index of 19 commodities fell as much as 2.3 percent today, led by declines in soybeans, wheat and crude oil. Gold climbed to $1,033.90 an ounce, the highest ever, on March 17. Oil, gasoline, corn, soybeans, wheat and platinum also advanced to records this year.

Gold futures for June delivery dropped $15, or 1.6 percent, to $921.50 an ounce on the Comex division of the New York Mercantile Exchange. The metal gained 10 percent this quarter and dropped 5.5 percent in March.

Silver futures for May delivery tumbled 63 cents, or 3.5 percent, to $17.31 an ounce. The metal gained 16 percent this quarter and fell 13 percent this month.

Soybeans fell the maximum allowed by the Chicago Board of Trade, and wheat dropped to a two-month low after a government report showed farmers will plant more to take advantage of record prices. Crude fell as much as 5.1 percent on speculation a slumping U.S. economy will slash fuel demand.

Commodities headed for the first monthly loss in four after reaching records in March. The CRB Index touched 385.41 today, down from the record 422.12 on March 13.

The US recession is affecting not only main indices these days, but also major commodities, currencies and the most popular bonds. Check out the gnuTrade Market Talk Section and its Forums for more information about current market trends.

U.S Fed cut interest rates for third time; Stocks Plunged

The Federal Reserve cut the interest rate today by a quarter of a percentage point, to 4.25 percent, although it was expected to be a bigger cut than this. This had a massive impact on almost all the stocks; however the Treasury bonds prices rose. “A mild recession is now likely, with no growth for the year ahead,” Richard Berner, chief domestic economist at Morgan and Stanley declared in a report to clients this week.

The U.S. Stocks were hit by the rate cuts, the Fed’s move slumped the Dow Jones Industrial Average Index to 2.14 percent. And the S&P 500 Index saw a decline by 38.31 or 2.53 percent, to 1,477.65 at close time.

The U.K‘s benchmark FTSE 100 Index fell by 0.43, to 6,536.90 at 10.00 a.m. in London with the Germany's benchmark stock index the DAX Index declining to 0.3 percent.

The Asian stock market also showed a down slope with the Japanese stocks falling high after the Federal Reserve cut interest rates by a quarter points. This disappointed the Asian investors at large. The Nikkei 225 declined by 112.46, or 0.7 percent, to 15,932.26 at the close of trading in Tokyo. Of the index's 225 stocks, 73 rose and 140 declined and 12 were unchanged.

However the fact is very clear that the U.S Fed rate cuts have largely influenced the stocks and any rate cuts further would bring them even down. But the Bond market is flying high with investors showing much interest towards them rather than the stocks. In future may be the Bonds, the Commodities and the currencies will be at higher end than the stocks.