Profit taking on surging gold price takes steam out of stocks

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Wave of wild trade after metal shoots up close to $2,000 an ounce

People stand in front of an electronic board showing a China stocks advertisement outside a brokerage in Tokyo, Japan. Picture: REUTERS/TORU HANAI

Gold is still up over $130 in little more than a week as investors wager the Federal Reserve will reaffirm its super-easy policies at a policy meeting this week, and perhaps signal a tolerance for higher inflation in the long run. The pullback in gold took some steam out of stocks but MSCI’s broadest index of Asia-Pacific shares outside Japan was still up 0.8%.E-Mini futures for the S&P 500 edged up 0.1%, while Eurostoxx 50 futures added 0.4% and FTSE futures 0.4%.That rise was again led by technology stocks as investors wagered on upbeat earnings reports due this week. Analysts also noted the falling dollar was a positive given that more than 40% of S&P 500 earnings come from abroad.

“One clear pattern is how economies linked most tightly to China — including commodity producers as diverse as Australia, Chile and Brazil — have tended to perform better than economies most directly linked to the US, notably its Nafta trading partners,” said Ruskin. The story was much the same against the Japanese yen, as the dollar touched a four-month trough at 105.10 before last trading at 105.55.

 

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