Metals prices grabbed the headlines on Tuesday as gold briefly topped the $500 an ounce mark for the first time in 18 years and platinum touched a 26-year high above $1,000.
Copper hit a fresh record high and several other base metals hit multi-year peaks.
But gold failed to hold above $500 for long, and analysts were quick to point out that the yellow metal had undergone a sharp correction after breaching that level in 1987.
“History shows that the $500 an ounce level has been a difficult barrier to hurdle for gold, and that once it has done so, the rot tends to set in,” said Yingxi Yu, analyst at Barclays Capital.
She said that for gold’s bull run to continue, the market needed long-term investors.
“We suspect that current speculative interest reflects tactical buyers likely to exit fast at the first sign that the upward trend is faltering,” she said.
There was some positive news on the US economy on Tuesday in the form of strong consumer confidence and new homes sales data.
The figures initially sent equity prices higher in both New York and Europe, although the gains faded as the session wore on.
The Conference Board’s index of consumer confidence rose to 98.9 in November from an upwardly revised 85.2 in October, the biggest increase for more than two years.
New home sales, meanwhile, jumped by 13 per cent last month to hit a record annual rate. The data appeared to contradict other signs that the US housing market was losing momentum.
Other figures showed US durable goods orders jumped 3.4 per cent in October, though much of the increase was due to increased demand for aircraft.
The day’s economic data had only a limited impact on equity prices, however.
The Dow Jones Industrial Average was virtually flat, down 2.40 points at 10,888.32, as was the broader S&P 500, up .05 points at 1,257.51.
The Nasdaq Composite index, dragged down by losses in Google, fell 0.3 per cent, or 6.66 points to 2,232.71.
In Europe, the FTSE Eurofirst 300 index ended just 0.2 per cent higher at 1,242.64, having earlier touched 1,247.07. The benchmark hit a 3½-year high on Monday.
Barclays was a notable faller on Tuesday after a trading update from the UK bank disappointed investors.
In Japan, an eight-day run of gains for the Nikkei 225 Average came to an end as the technology sector succumbed to profit-taking. The Nikkei fell 0.4 per cent, while South Korean stocks dipped 1.1 per cent after hitting an all-time high in the previous session.
The dollar rose to within striking distance of the 27-month high it hit against the yen on Monday following the day’s US economic releases. Treasury bonds fell sharply, sending yields higher.
“Overall, all three pieces of data today have hawkish implications for GDP and interest rates,” said Ian Morris, chief US economist at HSBC.
“The Federal Reserve is hinting that monetary policy will be more data driven
in future quarters, and these numbers do suggest the potential for a higher
Fed funds rate than previously thought, particularly if this strength were to be maintained into the first quarter.”
Oil prices moved lower, with benchmark Nymex crude futures heading back towards the $57 a barrel level.
The Organisation of the Petroleum Exporting Countries said it was targeting a stock level of 56 days of forward cover, which would offer scope for a large build-up in crude inventories.
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