Gold below $1,300; platinum heads for best week

Gold struggled below $1,300 an ounce on Friday as U.S. jobs and factory data indicated brighter prospects for the economy, hurting the metal's appeal as an investment hedge.

Platinum was headed for its best weekly gain in three months on supply worries from prolonged strikes in top producer South Africa, while palladium was also poised for a weekly jump.

New applications for U.S. unemployment benefits hit a seven-year low last week while consumer prices recorded their largest increase in 10 months in April. Factory activity in New York state expanded at its quickest pace in nearly four years in May.

Read More Why gold could struggle if US inflation gets hot

Spot gold was little changed at $1,296.70 an ounce by 0345 GMT, after dropping 0.7 percent on Thursday.

"Despite Thursday's modest sell-off in gold, we remain constructive on the precious metal short term, as there are too many geopolitical hot spots that still have the capacity to flare up rather unexpectedly," INTL FCStone said in a note.

The metal is still up 0.6 percent for the week on earlier gains from political uncertainty in Ukraine, which has increased tensions between Russia and the West.

Gold is often seen as a safe-haven investment compared with riskier assets such as equities.

Investor interest perked up with SPDR Gold Trust, the world's biggest gold-backed exchange-traded fund, showing a modest increase in flows. Holdings in the fund rose 1.79 tonnes to 782.25 tonnes on Thursday - the first inflow in a month.

Read More Surprise commodity winner could be 'the new gold'

U.S. data also showed that hedge fund Paulson & Co in Q1 maintained its stake in SPDR as bullion prices rebounded from their biggest annual loss in 32 years in 2013, while PIMCO dissolved its gold ETF investment.

In news among other precious metals, platinum producer Lonmin said on Thursday it might go to court in a bid to stop a 16-week strike in the platinum belt because of the levels of violence faced by workers who want to return to work.

The current stoppage has hit about 40 percent of global production of the precious metal used for emissions-capping catalytic converters in automobiles, with about 880,000 ounces lost to date, according to Reuters' calculations.

Platinum was headed for a 3 percent weekly jump, while palladium was up nearly 2 percent.

Source:

www.cnbc.com

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J.C. Penney Gains as Sales Forecast Signals Turnaround Momentum

Feb. 27 (Bloomberg) -- J.C. Penney Co. surged after forecasting an increase in annual revenue and margin expansion, prompting Chief Executive Officer Mike Ullman to predict its turnaround will be completed this year.

Same-store sales will increase by a mid-single digit percentage and gross margin will “significantly” improve this year, the Plano, Texas-based company said yesterday in a statement. Liquidity at the end of 2014 is projected to hold steady at $2 billion, the company said. The shares rose as much as 17 percent in extended trading in New York.

Ullman’s attempt to revive the department-store chain gained traction during a holiday season marked by a discount war among retailers seeking to attract tentative shoppers. Following losses and plummeting sales caused by former CEO Ron Johnson, Ullman returned to the helm in April and helped the chain post its first same-store sales gain last quarter since the period ended April 2011.

“The most important thing Ullman’s done is to give people confidence, whether its vendors, merchants or store employees,” said Paul Swinand, an analyst for Morningstar Inc. in Chicago. “His strategy is not anything earth shattering. It’s just getting back to where they were, working hard and being smart. Not trying to change too much at once.”

J.C. Penney jumped 14 percent to $6.77 at 6:07 p.m. in late trading yesterday in New York, after reaching $6.96. The shares had declined 35 percent this year through the close of regular trading yesterday.

First Profit

The chain also posted its first profit in more than two years in the fourth quarter, benefiting from Ullman returning the company to its traditional discounting strategy and reviving popular private-label brands.

Net income was $35 million, or 11 cents a share, in the quarter ended Jan. 31, compared with a loss of $552 million, or $2.51, a year earlier, the company said. Excluding the sale of assets and tax benefits, such as a $270 million change in the value of its pension, the company posted a loss of 68 cents a share. The average of 24 estimates compiled by Bloomberg was a loss of 86 cents.

The company has spent the past 10 months improving its finances and operations and now is ready to return to growth and profitability, Ullman said on a conference call with analysts to discuss the results.

“The most challenging parts of the turnaround are behind us,” Ullman said.

Liquidity Concern

Liquidity became a concern after the company wracked up losses and spent heavily on trying to execute Johnson’s transformation of the century-old retailer. After Ullman returned in April, the company raised almost $4 billion in cash through borrowings and a share sale last year.

Despite saying it would have $2 billion in liquidity at the end of last year, Charles Grom, an analyst for Sterne Agee & Leach Inc., wrote in a note to clients on Feb. 19 that the chain may need to raise more capital in a few quarters if the sales recovery doesn’t accelerate.

J.C. Penney’s operations generated $383 million last quarter, down from $645 million a year earlier. That led to free cash flow of $246 million, boosting its cash position 23 percent to $1.51 billion. That coupled with $500 million in borrowing capacity under its credit revolver gave it $2 billion in liquidity at the end of the last fiscal year. It expects to have the same amount by the end of 2014.

Best Performance

Revenue fell 2.6 percent to $3.78 billion, trailing analysts’ $3.86 billion average estimate. Excluding sales during an extra week a year earlier, revenue would have risen 1.6 percent.

Same-store sales, which are a key gauge of a retailer’s growth because new and closed stores are excluded, had the first gain since the quarter ended April 2011. Revenue by that measure, which includes online sales, may increase by as much as 5 percent this quarter. That would be the best performance since the period ended Oct. 28, 2006.

News Source: www.sfgate.com

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