Gold Rises With Oil; Commodity Shares Lead S&P 500 Higher

Gold climbed for a fifth day, the longest rally of the year, after the metal last week posted the biggest price slump in three decades. Oil rose and energy and raw-material producers led U.S. stocks higher.

Gold for immediate delivery rose 1.6 percent to $1,426.45 an ounce as of 5 p.m. in New York. The Standard & Poor’s 500 Index added 0.5 percent after slumping 2.1 percent last week, its worst drop since November. Ten-year U.S. Treasury yields lost one basis points to 1.69 percent. Italy’s note yields decreased as the country elected a president and the Stoxx Europe 600 Index climbed 0.2 percent. The yen gained for the first time in five days after failing to weaken through 100 per dollar, a level last reached four years ago.

Gold has rebounded after reaching a more than two-year low on April 15. The metal entered a bear market this month amid decreased demand for a hedge against inflation and concern struggling European nations will sell gold to raise cash. Data from the Shanghai Gold Exchange and the the U.S. Mint showed demand for gold has surged following the biggest price slump in three decades.

“Strong demand for physical gold is a major factor working to lift gold prices up from last week’s lows and beginning to suggest a market bottom is in place,” Jim Wyckoff, a senior analyst at Kitco Inc., a precious-metal refiner and research company in Montreal, said in a report.

Gold futures for June delivery jumped 1.8 percent to close at $1,421.20, the highest settlement since April 15.

Physical Demand

The volume for the Shanghai Gold Exchange’s benchmark cash contract today exceeded 43,000 kilograms (43 metric tons) for the first time, according to data on the bourse’s website. The U.S. Mint has sold 167,500 ounces of gold coins in April, compared with 62,000 ounces in all of March, data on the Mint’s website showed.

The S&P GSCI gauge of 24 commodities added 0.3 percent after falling 7.3 percent the past three weeks. Oil rose 0.9 percent to $88.76 a barrel in New York. Copper futures for delivery in July lost 0.6 percent to $3.144 a pound on the Comex in New York. Last week, the price slumped 5.6 percent, entering a bear market.

Thirty-year U.S. bond rates were little changed at 2.88 percent, while two-year Treasury yields fell less than one basis point to 0.23 percent. The U.S. will sell $35 billion in two-year debt tomorrow, the first of three auctions this week totaling $99 billion.

Moving Average

Benchmark yields traded under the 200-day moving average for a seventh day as sales of previously owned U.S. homes unexpectedly dropped in March, showing uneven progress in the industry. Yields climbed earlier after the re-election of Giorgio Napolitano as Italy’s president boosted speculation he will help resolve the nation’s political gridlock.

Purchases of previously owned houses, tabulated when a contract closes, fell 0.6 percent to a 4.92 million annual rate last month, figures from the National Association of Realtors showed today in Washington. The median forecast of 75 economists surveyed by Bloomberg projected sales would increase to a 5 million rate. Prices climbed, reflecting more demand for higher-priced houses.

Gauges of energy and raw-material producers climbed at least 1 percent to lead gains in eight of the 10 main industries in the S&P 500, with Newmont Mining Corp. and Exxon Mobil Corp. rising at least 0.7 percent to pace the advance.

Caterpillar Inc. gained 2.8 percent as the company said it plans to resume its stock buybacks and that output in China will rise, overshadowing disappointing earnings and a reduced 2013 forecast. Halliburton Co. jumped 5.6 percent after reporting first-quarter profit that exceeded analysts’ estimates. Power-One Inc. soared 57 percent after ABB Ltd. agreed to buy the maker of solar-power inverters for about $1 billion.

Earnings Season

Earnings beat estimates at 72 percent of the 111 companies in the S&P 500 that posted results so far this season, while less than 50 percent exceeded revenue projections, according to data compiled by Bloomberg.

Italian banks helped lead gains in European shares today. UniCredit SpA and Banco Popolare SC advanced at least 2.7 percent. Italy’s Napolitano, the 87-year-old head of state, admonished the fractious lawmakers who brought him back for a second term and pledged to break the country’s political impasse. Napolitano will be sworn in for a second seven-year term today and could begin consultations on a new government as soon as tomorrow

Delhaize Group SA climbed 11 percent after the Brussels-based retailer reported earnings that beat analyst estimates.

Italy’s two-year note yield slid as much as 13 basis points to a record low of 1.21 percent, while 10-year yields fell 17 basis points to 4.06 percent, the lowest since November 2010. The yield on benchmark German bunds slipped two basis points to 1.23 percent. The euro strengthened against 12 of 16 major peers.

Krona Climbs

The Swedish krona rose against 14 of its 16 major peers after Riksbank Deputy Governor Lars E.O. Svensson said he will leave the central bank’s board when his term expires after failing to get support for his calls for deeper interest rate cuts.

The yen slid earlier against the dollar as Bank of Japan Governor Haruhiko Kuroda said he was emboldened to press ahead with policy that includes buying 7 trillion yen ($70.1 billion) of bonds each month after the Group of 20 nations backed stimulus efforts.

The MSCI Emerging Markets Index added 0.1 percent. The Philippine Stock Exchange Index surged 2.4 percent, the most in almost four weeks, on speculation the central bank will cut rates on deposit accounts this week. Benchmark gauges South Korea and the Czech Republic gained more than 1 percent. Brazil’s Bovespa increased 0.7 percent.

The Shanghai Composite Index slipped 0.1 percent as Chinese insurers slumped on concern claims arising from the Sichuan quake will hurt earnings.

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