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Gold Almost Erases This Year’s Gains, Cotton at 21-Month Low

May 11, 2012 at 21:29 by Vladimir Vyun

Gold traded close to the lowest level this year before rising a little. The precious metal gives little hopes to bulls as problems in Europe make the dollar stronger, subduing commodity prices. The United States also causes some concern, even though it is in far better shape than the debt-ridden European Union. The US Producer Price Index fell 0.2 percent today, even though forecasters promised it to stay unchanged. Gold was up to $1,589.60 today on COMEX after reaching $1,586.10 — the lowest level since January 3.

Cotton reached the lowest level in 21 months today on a forecast that global stockpiles will swell. The US Department of Agriculture predicted that world inventories will climb 10 percent to 73.75 million bales in the season that begins August 1. Rains in Texas improved prospects for crops that were hurt by drought last year, adding to potential supply. At the same time, economic problems in countries across the world are likely to diminish demand for commodities, including cotton. Cotton slumped from $0.8149 to $0.7885 per pound on ICE today after it reached earlier $0.7716 — the lowest price since July 30.

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