Sun, Jun 03, 2018 - Page 14 News List

Investors ditch gold ETF as interest rates dim appeal

Bloomberg

Investors left the second-largest exchange-traded fund (ETF) tracking gold as climbing interest rates dimmed the precious metal’s appeal as a safe haven.

The US$12 billion iShares Gold Trust had about US$170 million in outflows on Wednesday, the most since March last year.

The ETF has taken in almost three times as much cash this year as its larger competitor, the US$36 billion SPDR Gold Shares fund.

Gold has struggled to hold onto its gains this year as the US dollar strengthens and borrowing costs in the US rise, hurting the appeal of the non-interest bearing metal.

Spot gold on Friday fell 0.4 percent to US$1,293.60 an ounce, down 0.8 percent from last week’s US$1.304.48.

COSTLY COTTON

Apparel retailers are finally winning back shoppers just as a new potential problem arises: more expensive cotton.

Abercrombie & Fitch Co is keeping an eye on rising cotton prices and the retailer’s supply chain teams are working to try to offset the costs, the company said on a conference call on Friday after reporting first-quarter earnings.

Retailers have begun to bounce back from a shift away from apparel by consumers, who are spending more of their money on experiences and technology.

Now, after a first quarter when many clothing companies saw improved demand, commodity prices might hamper that good news.

Cotton futures on Tuesday surged to a four-year high in New York as heavy storms and chilly weather exacerbated concerns about supplies at a time of record demand.

Drought conditions in top grower Texas might lead farmers to abandon crops above average rates.

Meanwhile, cold snaps in China and dryness in India might curb Asian production.

Futures for December delivery on Friday rose as much as 1.5 percent, and the fiber posted its seventh weekly gain, the longest rally since March 2013.

Cotton has climbed 17 percent this year after surging a combined 30 percent in the past three years.

SOUTHERN AIMS HIGH

Southern Copper Corp is preparing to scale the ranking of global producers by spending more than US$10 billion in Peru and Mexico, taking advantage of rising prices underpinned by years of industry belt-tightening.

The fifth-largest copper producer hopes to start work on its Tia Maria project in Peru next year as community resistance eases, chief financial officer Raul Jacob said on Thursday in an interview from Lima.

Based on the economic benefits it will bring, a majority of the local population now supports Tia Maria, he said.

Still, the company said it would not go ahead until the social conditions are right.

It is looking to add education programs to its health initiatives in the area to help build community support.

The project was stalled by deadly protests in 2015.

Together with investments in Mexico, the company wants to lift capacity to 1.7 million tonnes by 2025 from about 900,000 tonnes, leapfrogging Glencore PLC and BHP Billiton Ltd to become the No. 3 producer of the red metal, Jacob said.

Copper on Friday fell 0.2 percent at the London Metal Exchange to US$6,840 per tonne, down 0.6 percent for the week.

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