Singapore/Bangkok: Silver and gold climbed to records and oil rose for a fourth day, while the dollar weakened, amid concern inflation will accelerate. US stocks retreated before a report on new-home sales.
Silver for immediate delivery gained 1.5% at 9.33am in New York after earlier jumping 5.4% to $49.79 an ounce. Gold climbed for a ninth day, while oil rose 0.6% in New York. The Standard and Poor’s (S&P) 500 Index slipped 0.1% while Canada’s S&P/TSX Composite Index advanced 0.1% after Barrick Gold Corp. agreed to buy Equinox Minerals Ltd for C$7.3 billion ($7.68 billion) in cash. The dollar weakened versus 11 of 16 major peers and the yen fell against all 16.
The dollar’s retreat came as investors looked ahead to the Federal Reserve’s statement on interest rates and the economic outlook in two days. The homes sales data may bolster speculation that the Fed will announce plans to complete its purchase of $600 billion of Treasuries by June. Other data this week may show Japan’s retail sales sank and US economic growth slowed, leading the nation’s central banks to keep interest rates near zero, according to economists surveyed by Bloomberg.
Japan and the US are the countries that can’t steer toward monetary tightening, so the yen and dollar will be weak, said Daisaku Ueno, president of Gaitame.com Research Institute Ltd in Tokyo, a unit of Japan’s largest currency margin company.
The Federal Open Market Committee will hold the benchmark rate in a range of 0-0.25% on 27 April, according to all 80 economists surveyed by Bloomberg. GDP rose at a 1.9% annual pace after increasing at a 3.1% rate in the previous three months, according to the median estimate of 66 economists surveyed by Bloomberg before an 28 April commerce department report.
The Dollar Index slid 0.3% to 73.882. The gauge, used by IntercontinentalExchange Inc. to track the greenback versus the currencies of six major US trading partners, touched 73.735 on 21 April, the lowest since August 2008.
The S&P 500 last week increased 1.3%, triggered by profit that topped estimates at companies from Intel Corp. to Johnson and Johnson. Earnings-per-share have exceeded analysts’ estimates at 81% of the 124 companies in the index that have reported results since 11 April, data compiled by Bloomberg show.
US stock markets were closed on 22 April for the Good Friday holiday.
New home sales, tabulated when contracts are signed, climbed 12% to a 280,000 annual pace last month, according to the median estimate in a Bloomberg News survey of 64 economists. Purchases slumped 17% in February to a 250,000 rate, the weakest in data going back to 1963.
Exchanges from Australia to the UK and Germany remain shut for the Easter holiday.
China’s Shanghai Composite Index led losses in Asia after China International Capital Corp. Ltd said the nation’s consumer prices may rise as much as 5.5% this month. Singapore’s inflation held at 5% in March, a government report showed on Monday.
“It’s very clear that some Asian countries will keep raising rates more while their economies are strong enough to see more hikes,” said Hideki Hayashi, a global economist at Mizuho Securities Co. Ltd in Tokyo. On the other hand, market players expect the US this week to suggest it would keep low rates for some time, which means more yield appeal for Asia.
Silver, which has more than doubled over the past year, traded at $48.2288 per ounce after earlier reaching a high of $49.79 as investors sought precious metals as a store of value. Gold for immediate delivery rose as much as 0.8% to a record $1,518.32 an ounce.
Oil for June delivery increased 0.6% to $112.93 a barrel on the New York Mercantile Exchange. Brent crude oil for June settlement fell 94 cents, or 0.8%, to $123.05 a barrel on the London-based ICE Futures Europe exchange.
The jump in commodity prices is fuelling speculation that policymakers in Asia will step up tightening efforts. The Malaysian ringgit gained as much as 0.5% to 2.9910, the strongest level since 9 October, 1997, on speculation the central bank will raise interest rates next month to help damp inflation.
“There’s a perception that central banks in Asia are allowing their currencies to appreciate so as to curb imported inflation,” said Lee Wai Tuck, a strategist at Forecast Pte in Singapore, in a Bloomberg Television interview. There are some concerns that if currencies do not appreciate, inflation may go even higher in countries including China and Singapore, he said.
Ron Harui, Masaki Kondo, Jake Lloyd-Smith and Glenys Sim in Singapore, John Dawson in Hong Kong, Jae Hur in Tokyo, Margot Habiby in Dallas and Ayesha Daya in Dubai contributed to this story.