Gold Shines On Stimulus Worries

Stocks headed for the fifth fall in six sessions on Monday, as signs of economic recovery pointed towards a cut in economic stimulus and monetary easing tapering. Safe-haven assets such as precious metals and the Swiss Franc, gained. Gold jumped to USD 1342 an ounce, the highest level seen in months, while Silver gained 3 %% since the end of last week, trading at USD 21.31 an ounce. EUR/USD continues to descend at 1.3288. USD/JPY is steady at 86.87.

 Global stock markets have been tiptoeing in August fearing that economic stimulus, the USD 85 billion monthly bond buying program, may come to a halt in September. Signs that China’s slowdown may run its course and expectations that data this week will prove that the Euro zone is pulling out of its longest recession on record, are bolstering hopes that the global economy is back on track. This most probably means an end to monetary easing.

 European stocks quickly lost the momentum created by Monday’s better than expected Chinese data, which gave the Asian markets a boost during the night. The major European indices were down as the futures for the US were down. Both Dow Jones and Nasdaq lost 0.36 %% in the opening of Monday’s session. Walt Disney, Boeing and JP Morgan were among the biggest losers. Intel and Alcoa were marginally up.

 Nikkei in Japan shed 0.7 %% and traded at the lowest level seen since June 28th, after data showed that Japan’s economy grew at a slower-than-expected pace in April-June. This prompted investors to cut their risk exposure. The Japanese Yen has gained 5 %% against the Dollar since USD/JPY reached a high of 103 Yen to a Dollar in early spring. The Japanese economy grew 2.6 %% in the second quarter, compared with 3.8 %% in the first quarter of 2013.

 Copper was 0.3 %% down after gaining 1.3 %%, a three month high, on Friday. Oil prices, which headed up on the presentation of the Chinese data, dipped 0.5 %%. Brent crude is trading below USD 108 a barrel. Gold gained for the fourth day in a row when holdings in the world’s biggest Gold exchange-traded fund rose for the first time in two months. The increased volume helped prices, but the fundamentals for Gold are still negative.

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