Exchange traded funds (ETFs) slipped Monday after a late tumble undercut advances from earlier in the day, and investors cautiously retreated ahead of key data reports later this week.
- Gold futures dipped below $1,420 an ounce Monday, as investors lacked a fresh reason on the geopolitical front to turn their attention to the metal. Gold for April delivery settled $6.30 lower, or down 0.4%, at $1,419.90 an ounce; that was gold’s lowest close in a little more than a week. “There’s no follow-through buying,” given the lack of news, said Andrey Kryuchenkov, an analyst at VTB Capital in London. “The physical [buying]side is absent. … Investors are just waiting for a deeper pullback. They are not in any rush to jump in. Things are not rosy, but they are not worse, either.” A “lack of significant fresh developments from current geopolitical issues has resulted in some anxiety draining out of markets like gold,” analysts at MS Futures said in a note to clients Monday. The Market Vectors Gold Miners ETF (NYSEArca: GDX) ended down 1.75% today.
- The dollar fell against the Euro in mid afternoon trading after a speech by European Central Bank President Jean-Claude Trichet indicated to investors that higher interest rates are likely. Investors already expected that the European Central Bank will raise rates when they meet next month. However, Trichet’s speech on Monday refocused the idea and helped push the Euro higher against the dollar, said Camilla Sutton, chief currency strategist at Scotia Capital in Toronto. Central banks raise interest rates to help counter inflation, and higher rates on government bonds tend to increase demand for the currency linked to that country or region. The CurrencyShares Euro Trust ETF (NYSEArca: FXE) was slightly higher at days end.
- Crude-oil futures fell to their lowest level in a week Monday, as investors had high hopes that Libyan oil may be back to the pipelines sooner than anticipated. Over the weekend, rebel forces in Libya captured key eastern oil towns, spurring expectations that the anti-government advance could hasten the end of the conflict. In addition, as stocks moved higher, funds flowed into U.S. equities and out of some commodities, including oil. Crude oil for May delivery slipped $1.42, or 1.4%, to $103.98 a barrel, marking oil’s lowest close since March 21. “The rebels in Libya have regained the major oil ports of Brega and Ras Lanuf, thanks to Western support,” Commerzbank analysts said in a note. “This is clearly stirring hopes that oil shipments in Libya could normalize soon.” The Oil Services HOLDRs ETF (AMEX: OIH) ended 1.79% higher on Monday.
- Interest rates on short-term Treasury bills rose in Monday’s auction with rates on six-month bills rising to the highest level in nearly two months. The Treasury Department auctioned $32 billion in three-month bills at a discount rate of 0.100%, up from 0.095% last week. Another $30 billion was auctioned in six-month bills at a discount rate of 0.170%, up from 0.150% last week. The three-month rate was the highest since these bills averaged 0.110% on March 7. Separately, the Federal Reserve said Monday the average yield for one-year Treasury bills, a popular index for making changes in adjustable rate mortgages, rose to 0.26% last week from 0.23% the previous week. The iShares Barclays Short Treasury Bond ETF (NYSEArca: SHV) ended the day flat.
Read the disclaimer; Tom Lydon is a board member of Rydex|SGI.
Gregory A. Clay contributed to this article
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.