Gold rout sends global miners lower; S&P 500 tops closing record

[NEW YORK] The rout in commodities worsened as the prospect for higher US interest rates sent gold to the lowest level in more than five years. Miners posted the steepest losses in benchmark stock indexes around the world, with selling heaviest among resource producers in emerging markets.

Bullion slid 2.1 per cent to US$1,108 an ounce at 1.10 pm in New York, sending the Bloomberg Commodity Index to its lowest since 2002. The euro traded at US$1.0851, near a two-month low. The MSCI Emerging Markets Index fell 0.8 per cent.

Investors have soured on precious metals as the dollar has emerged as the champion currency with the Federal Reserve closer to raising rates for the first time since 2006. AngloGold Ashanti Ltd. sank to a record in Johannesburg, while Canada's Barrick Gold Corp dropped to the lowest since 1990. Better- than-forecast corporate earnings overshadowed a slump in American commodity producers as the Standard & Poor's 500 Index edged past its closing record.

"We've seen a resumption of a rally in the dollar and if you do the math, that's bad for commodity prices," said Peter Sorrentino, a Cincinnati-based fund manager at Huntington Asset Advisors, which oversees US$1.8 billion. "The implications there for the hard asset part of the global economy is pretty abysmal looking out to the rest of the year."

The S&P 500 is on track to close at a high for the first time since May 21. It fell as much as four per cent from that level before rebounding, with most of the gains coming during a 2.4 per cent rally last week. Advances in Google Inc. and Facebook Inc. pushed the Nasdaq Composite Index to a record for a second day on Friday, while the Nasdaq 100 surged 5.5 per cent in that week to a 15-year high.

Visa and Apple paced gains in technology shares on Monday, with banks and health-care shares also advancing. Morgan Stanley rose after profit beat analysts' estimates, while Halliburton advanced after its earnings fell less than predicted. Lockheed Martin gained after its quarterly results exceeded estimates.

BLOOMBERG