Gold Hits Record High as Global Stock Markets Diverge
Global stock markets took a divergent path on Friday, with Wall Street experiencing profit-taking while European and Asian markets rallied on reassuring data about the world’s largest economy and likely US interest rate cuts. As a result, gold prices surged to a record high of $2,500.16 an ounce.
The dollar weakened as expectations of US interest rate cuts grew, while oil prices tumbled due to weak Chinese demand expectations and turmoil in the Middle East. Traders noted that the sharp drop in bond yields amid expectations of rate cuts by the Federal Reserve has pushed gold prices higher.
On Wall Street, the major indices pulled back after rallying on Thursday following stronger-than-expected retail sales data that dispelled fears of a recession. The blue-chip Dow slipped 0.2 percent, the S&P 500 shed 0.3 percent, and the tech-heavy Nasdaq Composite fell 0.3 percent.
Analysts attributed the market’s cautious tone to concerns about the stock market being in a short-term overbought state, combined with weak housing starts and building permits data for July and the strengthening yen. The Nikkei 225 jumped 3.6 percent in Asian trading as the yen weakened against the dollar.
In corporate news, shares in German chemicals giant Bayer jumped 10.7 percent after a US court victory in the group’s long-running fight against claims that its glyphosate-based weedkillers cause cancer.
Oil prices slumped around 1.5 percent, with Brent North Sea crude falling under $80 per barrel. Analysts attributed the decline to the lack of a retaliatory strike by Iran against Israel, which had previously fueled concerns about oil demand. Additionally, new demand concerns are weighing on the market.
Key figures around 1330 GMT include:
- New York – Dow: DOWN 0.2 percent at 40,502.13 points
- New York – S&P 500: DOWN 0.3 percent at 5,525.71
- New York – Nasdaq Composite: DOWN 0.5 percent at 17,507.74
- London – FTSE 100: DOWN 0.6 percent at 8,301.82
- Paris – CAC 40: UP 0.2 percent at 7,434.24
- Frankfurt – DAX: UP 0.5 percent at 18,277.46
- Tokyo – Nikkei 225: UP 3.6 percent at 38,062.67 (close)
- Hong Kong – Hang Seng Index: UP 1.9 percent at 17,430.16 (close)
- Shanghai – Composite: UP 0.1 percent at 2,879.43 (close)
- Euro/dollar: UP at $1.1000 from $1.0972 on Thursday
- Pound/dollar: UP at $1.2901 from $1.2853
- Dollar/yen: DOWN at 147.76 yen from 149.06 yen
- Euro/pound: DOWN at 85.26 pence from 85.36 pence
- West Texas Intermediate: DOWN 1.6 percent at $76.88 per barrel
- Brent North Sea Crude: DOWN 1.5 percent at $79.84 per barrel
