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Thursday, July 04, 2013

Bullions shine



Political turmoil in Egypt and Portugal help boost investor appetite

Gold futures finished higher on Wednesday, 03 July 2013 at Comex recouping some of what they lost in the previous session, as a fall in the U.S. ISM services index and political turmoil in Egypt and Portugal helped boost investor appetite for the precious metal as a haven.

Gold for August delivery rose $8.50, or 0.7%, to settle at $1,251.90 an ounce on the Comex division of the New York Mercantile Exchange. September silver rose along with gold, tacking on 39 cents, or 2%, to $19.70 an ounce.

Portugal returned to headlines after two key government officials (finance minister and foreign minister) submitted their resignations. In addition, reports indicate two more ministers (agriculture and social security) are set to follow suit. As a result, the country's benchmark 10-yr yield spiked 85 basis points to 7.31%. In addition Portugal's PSI index fell 5.3%. The concerns regarding the country's future spilled over to other peripheral economies. Italy's 10-yr yield climbed 11 basis points at 4.51% while Spain's benchmark 10-yr yield jumped 14 basis points to 4.70%.

Today's economic data at Wall street was plentiful. The initial claims level decreased from an upwardly revised 348,000 (from 346,000) for the week ending June 15 to 343,000 for the week ending June 29. The consensus pegged the initial claims level at 348,000.For the past several weeks, the initial claims level has moved in a slight sawtooth pattern, but overall, trends have been relatively flat. Labor conditions have not materially changed over this time.

June ADP Employment Change came in at 188,000 while the consensus expected a reading of 150,000. In addition, June Challenger Job Cuts rose 4.8% year-over-year to follow the prior month's decline of 41.2%.

The June ISM Services Index was reported at 52.2, below the 54.0 forecast by the consensus, and down from the May reading of 53.7.

Separately, the U.S. trade deficit widened to $45.0 billion in May from an upwardly revised $40.1 billion (from $40.3 billion) in April. That was the largest deficit since November 2012. The consensus expected the trade deficit to increase to $40.8 billion. The goods deficit rose to $63.4 billion in May from $58.4 billion while the services surplus increased to $18.4 billion from $18.3 billion. May exports fell by $0.5 billion from $187.6 billion in April to $187.0 billion.