Posts Tagged ‘gld’

Fed To Keep Rates Low Until 2014

Wednesday, January 25th, 2012

With Congress paralyzed by partisan politics, the central bank faces intense pressure as one of the few government institutions that can foster economic growth. Its actions to serve that mission have drawn critics from all sides. The Fed has repeatedly underestimated the challenges facing the economy and, as a consequence, has not responded strongly enough. As part of an effort to provide more insight on its thinking to financial markets and the public, the Fed today began publishing individual policymakers’ projections for the appropriate path of the benchmark federal funds rate. If the Fed can convince financial markets it will be on hold longer than they had anticipated, long-term interest rates could drop as investors price in the new information. Federal Reserve Chairman Ben S. Bernanke has pushed for greater openness at the Fed since he took office five years ago. The chairman hopes that by routinely giving the public more information about the Fed’s expected plans, it will be easier for the central bank to influence the markets. U.S. Federal Reserve said it will not raise interest rates until at least late 2014, even later than investors expected, in an effort to support a sluggish economic recovery. After the announcement, U.S. stocks pared losses while Brent and U.S. crude futures rose. The dollar erased gains against the euro. U.S. Treasurys hit session highs, and gold and silver gained. 

Without making major shifts to its outlook for the economy, the central bank described the unemployment rate as still elevated and said it expects inflation to remain at levels consistent with stable prices. It depicted business investment as having slowed, downgrading its assessment from the December meeting. Eleven Fed leaders said it is appropriate to start raising rates in 2014 or beyond, 18 months longer than previously planned; just six said it is more appropriate to raise rates this year or next. Previously the Fed said that it would keep interest rates near zero through mid-2013.

The Fed’s predictions for economic growth, inflation and the unemployment rate stayed largely unchanged since the November meeting. The Fed slightly reduced its projections for economic growth this year to between 2.2 percent and 2.7 percent, though it predicted a slightly better unemployment rate of 8.2 percent to 8.5 percent. The Fed said it expects inflation to come in slightly below 2 percent, which it generally regards as appropriate. Fed officials also dismissed the risk of inflation and suggested that it wasn’t likely to be a concern any time in the near future. The Central bank also highlighted persistent challenges, including the depressed housing market and financial crises abroad, that stand in the way of a more rapid economic recovery.

All in all, the Fed statement suggested the central bank was prepared to take more action if necessary to support economic growth, such as by purchasing additional mortgage assets to drive down rates, though it did not say that it would take any such step soon.

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Italian Long Term Bond Auction Lifts Markets

Thursday, December 29th, 2011

Stocks continued to climb Thursday as the euro erased its drop versus the greenback and after a handful of better-than-expected economic data, but volume remained thin in the final week of trading for the year. The S&P is up 10 points to that stubborn 1260 resistance, but holding firmly. Italy sold just over 7 billion euros ($9 billion) in an auction of longer-term debt, with yields falling. The yield on Italian 10-year bonds fell from the euro era highs reached in November, settling slightly below the market-sensitive level of 7 percent in an auction on Thursday. Investors were looking to the auction of longer term Italian bonds to see whether appetite for the country’s debt had returned, after yields halved in the sale of six-month T-bills on Wednesday. The euro pared its early losses against the dollar to rise back above $1.29, but ongoing concerns about the euro zone crisis kept the currency close to a 15-month low. Gold slumped to its lowest level in almost six months to near $1,530 an ounce.

With only two full trading sessions left in the year, trading volume is expected to remain light throughout the shortened holiday week as most investors are unlikely to make large bets until after the New Year. Major averages have also been struggling to finish the year in positive territory. Of the three major averages, the Dow is the only index in the black for the year while the S&P is straddling the flatline.

Top line resistance in S&P 1330-1340

All bets are off if supports breaks 1200

Monti’s response after Italy’s auction

from FT

Italy has saved itself “from the edge of the precipice”, Mario Monti declared yesterday, defending the record of his six-week-old government while calling on the European Union to deliver a coherent response to the eurozone debt crisis by substantially increasing its bail-out fund. Italy’s technocrat prime minister used a traditional end-of-year press conference to reach beyond his domestic audience and deliver a strong message to the markets and his European partners – describing himself as the “most German of Italian economists” and insisting that Rome’s current high borrowing costs were not justified by its fundamentals.

Mr Monti said that under “normal conditions” – which he declined to specify – Italy would not need more austerity measures along the lines of the €30bn package approved by parliament last week intended to balance the budget by 2013. The government’s next focus, he said, would be a package of measures to regain lost competitiveness by liberalising the economy, particularly service industries and the labour market. First steps would be presented before an EU summit on January 23.

Mixing his metaphors, the former professor of economics and EU competition commissioner said Italy had been “on the edge of the precipice without a railing” and had been moving “very close to Greece” in a south-easterly direction. Italy had braced itself and was now moving with the winds behind it “to the north-west, towards Brussels and far from Greece”. “But the turbulence is absolutely not over,” he said. He directed his remarks at his fellow EU heads of government, particularly in Berlin – whom he recalled he had urged to do more to explain to their public the benefits they derive from the eurozone.

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Commodities Slammed; S&P Drops To 1210

Wednesday, December 14th, 2011

The Dow Jones Industrial Average (DJIA – 11,823.48) gave up 131.5 points, or 1.1%, to end below both its 20-day and 200-day moving averages for the first time since Nov. 29. The S&P (SPX – 1,211.82) was slapped for 13.9 points, or 1.1%, ending south of its own 20-day trendline for the first time this month. Stocks and commodities were slammed lower today, as escalating concerns about European debt sent Wall Street scrambling for the perceived safety of the U.S. dollar and 10-Year Treasury Bonds (1.89). The Euro sank to an 11 month low against the US Dollar, breaching the key $1.30 level for the first time in nearly a year. Dollar-denominated commodities like crude and gold (NYSE:GLD) tumbled.

Gold prices continued their precipitous fall, dropping sharply in morning trade. The yellow metal fell below its 200-day moving average for the first time since January 2009. Previous dips below the key metric often have been positive for gold. Over the following week, month, three months, six months, and one year, the price of gold has averaged gains with positive returns two thirds of the time. While gold saw negative returns in the three, six, and twelve months following the end of its 1980 and 1988 streaks, following the four remaining streaks the close below the 200-DMA turned out to be a pause that refreshed for gold. Short Gold (NYSE:DZZ)

Target $1400

Here’s a post from August 11th 2011 here

The price of US crude fell below $96 a barrel and could have much more room to drop should the global economic slowdown continue, despite actions by the Organization for Petroleum Exporting Countries. OPEC’s decision to raise the official target for the cartel’s output to close to the current level of production probably had little impact.   Short Oil (NYSE:SCO)

Target $85

Here’s a post from June 16th 2011 here

In Europe, an auction of Italian sovereign debt saw the euro zone’s third-largest economy pay a euro era record yield of 6.47 percent to sell five-year paper. The sale came after the EU tried to move towards greater fiscal integration at last week’s summit, adding to investor concerns. The National Bank of Greece has indicated it will seek shareholders’ approval for a 1 billion-euro government bailout, sending its shares sharply higher.

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In Search For A Market Bottom; S&P 1120

Friday, September 23rd, 2011

The bulls took quite a beating yesterday, as an extended post-Fed sell-off and dismal macroeconomic data sparked a mass exit. The DJIA fell 391 points to 10,733.83. Earlier in the session, the DJIA tagged a fresh annual low of 10,597.14 before paring its losses. The S&P dropped 37 points to 1,129.56 bottomed at 1,114.22 before reclaiming some ground. Investors continued to dissect the central bank’s statement of “significant downside risks to the economic outlook,” along with dismal economic reports from both China and Europe sinked stocks further. Federal Reserve’s Operation Twist boosted the US Dollar to multi-month highs, which sent dollar-denominated assets like crude oil and gold down. The DJIA suffered its worst point drop in five weeks, while the Volatility Index (VIX – 41.35) skyrocketed to a one-month high.

Crude futures fell to a six-week low today, as a mad rush for the greenback spooked foreign-currency holders from the dollar-denominated commodity. Furthermore, uninspiring economic data out of both China and Europe weighed on hopes for rebounding demand. Against this backdrop, November-dated crude oil futures gave up $5.41, or 6.3%, to end at $80.51 per barrel. The strengthening greenback also took a toll on precious metals yesterday, as did dismal manufacturing data out of China. By the time the dust settled, December-dated gold futures surrendered $66.40, or 3.7%, to finish at $1,741.70 an ounce. Meanwhile, silver for December delivery fell 9.6% to $36.58 its lowest settlement since July.

S&P (SPX – 1,129.56) – support at 1,100; resistance at 1,400

Markets were oversold yesterday. Today should bring in choppy trading. I expect further selling as momentum has gathered to the southside. I still remain cash with further hedges in short Gold DZZ, Silver SLV hedged with ZSL, and VXX

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Swiss Will Peg Franc To Euro; DJIA Drops 100

Tuesday, September 6th, 2011

1 CHF / Fünffranken

Call it a “safe haven shakeup”. The Swiss National Bank announced it will move to hold the franc at 1.20 per euro Tuesday, investors are seeing two of their safe havens called into question. The Swiss news broke after previous efforts by the central bank to deal with the ugly contest being waged by the euro and the U.S. dollar. Tuesday’s move is the most aggressive thus far, with the SNB pledging to purchase foreign currencies “in unlimited quantities” to maintain its target exchange rate with the euro. The Swiss franc, which has been a popular sort of safe haven for currency traders, depreciated 7.8% against the euro. This benefits Switzerland, exporters, Hungary, but it may not benefit the US dollar as investors seek safe havens. In the wake of these developments, the dollar may recapture some of its lost luster.

The dollar weakened further against the euro to 1.4181, while strengthening 7.8% against the Swiss franc to 0.8484. Yields on 10-year U.S. Treasuries still floated under 2%. Gold futures reached still higher to its all-time record, hitting $1,923 an ounce, before settling back to $1,870. Swiss companies surged on the news about the central bank’s intervention in the currency. The Swiss market index climbed 4.6% to 5,377, led by stocks like UBS AG, which gained 3.8% on the news. The SNB will have to buy boatloads of euros to counteract those flows. The difference between the SNB now and other countries attempts to weaken their currency (you can even count the Federal Reserve’s quantitative easing) is that the Swiss have the money. The best comparison is the March 2009 SNB intervention, when it’s estimated the central bank spent 4 billion euros ($5.6 billion at the current exchange rate) on intervention. It is also estimated that the SNB has much as 150 billion euros (almost $210 billion) in reserves to spend on intervention.  Even though the SNB has lost as much as $36 billion on intervention over the past year and a half, the central bank’s goal is not to make money on intervention – to breakeven is good enough.

Hungary’s prime minister says the Swiss Central Bank’s move to weaken the franc is good news for Hungarians, many of whom have mortgages in that currency. Read my report on Hungary here. Viktor Orban also says that the government will continue to seek ways to help homeowners with rising mortgages even though the franc fell from above 250 forints to around 230 forints on Tuesday’s announcement that it would be pegged to the euro. Some 60 percent of mortgages in Hungary are denominated in Swiss francs and in many cases monthly payments have doubled over the past year as the forint weakened considerably against the franc. The strong franc is also problematic for Hungarian municipalities, many of which took on franc loans to take advantage of lower interest rates.

The Dow Jones Industrial Average (DJIA – 11,139.30) fell as low as 10,932.53 before trimming its deficit to about 101 points, or 0.9%. The S&P (SPX – 1,165.24) also pared its losses as the session progressed, but still ended 8.7 points, or 0.7%, south of breakeven. U.S. stocks plummeted at the opening bell today (down as much as 300 points), as debt drama from across the pond fed the bears. Protests and pending austerity measures in Italy. A widespread flight to safety helped gold futures tag a new record high north of $1,900 an ounce, and sent the Volatility Index (VIX – 37.00) — also known as the market’s “fear gauge” more than 9% higher.

Treasury prices pared gains, after pushing 10-year yields to a record low, as U.S. stocks recovered some of their decline and investors seeking safety got flushed out of the Swiss franc after officials there set a ceiling for the currency against the euro.Yields on 10-year notes, which move inversely to prices, recently fell 1 basis point to 1.9753%, after touching an all-time low of 1.90%.With the economy already in stall mode, we may see the market, at worst, trade a low yield range for weeks or months to come.

Traders are anticipating more action from the Federal Reserve to lower long-term rates by simulating a strategy used decades ago called “Operation Twist.” The idea would be for the Fed to either sell shorter-dated debt — presumably maturing in three years or less — and replacing it with longer-dated securities like 10- and 30-year bonds. That would reduce the yield spread between short- and long-dated securities, possibly making borrowing and lending more attractive, without actually buying additional Treasury debt and expanding its already huge balance sheet.

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Buffet Invests $5billion In BofA (NYSE:BAC)

Thursday, August 25th, 2011

PHOTO: Warren Buffett, chairman and chief executive officer of Berkshire Hathaway Inc. attends the Allen & Co. Media and Technology Conference in Sun Valley, Idaho in this July 7, 2011 file photo.

BofA

Warren Buffett’s Berkshire Hathaway will invest $5 billion in Bank of America (NYSE:BAC), stepping in to shore up the company in the same way he helped prop up Goldman Sachs during the financial crisis. Bank of America shares rose 24 percent to $8.65 in early trading, erasing a large part of the stock’s August losses. This helps with the credibility gap that I think has existed in the minds of some shareholders. It reiterates the point that the balance sheet is healthy. They needed an endorsement in the market and they got it.

Bank of America will sell Berkshire // 50,000 shares of cumulative perpetual preferred stock with a 6 percent annual dividend, it said in a statement Thursday. Bank of America can buy back the investment at any time by paying Buffett a 5 percent premium. Berkshire also will get warrants to buy 700 million Bank of America shares at an exercise price of just over $7.14 a share, with the ability to exercise any time in the next 10 years. It is virtually a mirror of the deal Berkshire did with Goldman Sachs (NYSE:GS) in the depths of the crisis in fall 2008, except in this case the dividend is less. The Goldman deal paid Berkshire $15 a second in dividends until Goldman bought Buffett out earlier this year.

Europe

The three major rating agencies Fitch, Moody’s and S&P reaffirmed Germany’s rating and outlook on Thursday, after the country’s main stock index fell sharply on market speculation that a downgrade was on the cards. The markets were awash with speculation throughout the afternoon, with German regulator BaFin earlier denying earlier rumors that a ban on short selling will be implemented for the DAX. We are not planning any changes of the short selling rules which are already in place, BaFin representatives said. US stocks dropped around 1 percent, tracking earlier weakness in the DAX and Europe.

Gold Correction

 Gold prices fell for the third day as stronger equities and hopes of more monetary stimulus emboldened traders to seek riskier investments. Gold prices have slumped 11% peak to trough, putting them firmly in correction territory, as fears about a U.S. recession and the spread of Europe’s sovereign-debt problems take a back seat to renewed risk appetite. Investors have been willing to pay higher and higher prices for gold, which soared to a record $1,917.90 a troy ounce, as growing uncertainty about the global economy stirred demand for a sound store of value. Gold has been the only safe haven for a while there but some trades are concerned that gold has been going parabolic, we’ve been going up since the middle of July with no meaningful pullback. 

The recent 10% correction in benchmark U.S. stock indexes has some investors searching for bargains and selling profitable gold positions to pay for stocks. There’s a sense that maybe this equity selloff has been over done,” while gold’s ascent has been too much, too fast. A speech by Federal Reserve Chairman Ben Bernanke scheduled for Friday is further clouding the outlook for gold. Bernanke is due to address an economic symposium at Jackson Hole, Wyo., and many traders are hoping the Fed Chairman will hint at a third round of monetary stimulus. Dashing these hopes could damp the outlook for stocks and renew concerns about a U.S. recession, which would boost demand for gold as a haven. Yet, without such stimulus, inflation another driver of gold demand is unlikely to resurface. A lack of fresh easing signals by Bernanke on Friday could send gold down to $1,580

Gold on the Comex division of the New York Mercantile Exchange fell further on Thursday morning due to heavy liquidation after CME Group said it would raise margin requirements another 27 percent. As of the close of business tonight, speculators in Comex gold will be required to make an initial deposit of $9,450, up from $7,425 previously, to hold a benchmark 100-ounce gold contract overnight. The maintenance margin requirement for speculative traders and the margin for hedge accounts will rise to $7,000 from $5,500. By raising the margins, CME aims to rein in speculation by making it more expensive to hold the same amount of gold. This places short-term downward pressure on prices because smaller investors will be forced to liquidate positions to meet the higher margins.
“[But] while this might have placed a dampener on gold, and will probably continue to weigh on prices today, we don’t view this as overly bearish for gold.

But many in the market suspect that this is only the second in a series four or five margin increases. When silver approached $50 per ounce earlier this year, CME increased margins four times over a three-week period. “Proper margining would seem to be closer to $15,000 per contract, for given the volatility that exists presently the exchange needs to protect itself and its clients from the possibility that a large speculator or two or three cannot put the exchange into jeopardy.

Furthermore, exchange-traded fund (ETF) investors are currently taking profits after the record-breaking price rally and are shifting money to other investments such as equities, broker Commerzbank said in a note. For example, SPDR Gold Trust, the world largest ETF, registered outflows of more than 27 tonnes yesterday and 58.5 tonnes in total this week. “Although the price fall may to continue for a while, the lower price level could be used for greater physical gold buying, especially in Asia, and this is likely to prevent the price from dropping much further,” Commerzbank added. Another factor in gold’s slide has been the strong performance of the global share markets over the past several sessions. There is a feeling among market participants that equities had been oversold, while gold was overbought.

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S&P Support Remains 1120; Markets On A Bumpy Ride

Monday, August 22nd, 2011

Stocks squeezed out a small gain in light, choppy trading Monday, erasing most of the session’s earlier gains as traders were hesitant to fully jump in without any proper market conviction. Investors grappled with an uncertain economic outlook ahead of a key speech by Fed chairman Ben Bernanke on Friday. The Dow Jones Industrial Average gained 37 points, or 0.34 percent, to finish at 10,854.65 a key support above 10,800. The S&P notched up 0.29 points, or 0.03 percent, to close at 1,123.82 above the key support of 1120. Financial institutions were among the biggest drag in the markets.

At the end of the week, all eyes will be on Federal Reserve chairman Ben Bernanke as he makes his widely-anticipated speech at the Fed’s annual Jackson Hole, Wyoming symposium. Investors will watch for any signs of a possible round of asset purchases QE3 (also known as quantitative easing) which will likely help bolster the stock market temporarily. QE2 did not support markets permanently as we currently see.

Investors remain are also concerned about the debt problems in Europe, where policymakers have yet to propose a long-term solution. But he said business and consumer confidence in the United States may not be a weak as many investors had feared.

Meanwhile gold surged to settle at $1,891 an ounce, another all-time high, as investors fled to the commodity as a safe-haven play amid fears of another U.S. recession and the euro zone’s ongoing debt crisis.

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US Markets To Continue Sell Off Friday

Friday, August 19th, 2011

U.S. stocks were headed for another day of losses Friday, as worries of a global slowdown and Europe’s debt crisis sparked a second sell-off in global markets. Dow Jones industrial Average (DJIA) down (100), S&P 500 (SPX) down (9) to 1130  futures fell more than 1% ahead of the opening bell. Many investors are concerned the world economy is on the brink of another recession. European stocks approached two-year lows in Friday morning trade after already suffering heavy losses on Thursday. Fears that euro zone leaders would not be able to contain the debt crisis weighed on stocks, as did concerns over funding for European banks. Europeans are playing with fire and delaying the inevitable. They need to gurantee the back stop from bank losses. Commodities also suffered on Friday, with oil lower amid concerns about global growth. Meanwhile gold (NYSE:GLD) continued to touch new highs at $1875.

A day after Morgan Stanley cut global growth forecasts and said the United States and Europe are “dangerously close to a recession,” Deutsche Bank downgraded its growth outlook for China. The German investment bank said a slowdown or recession in the U.S. or European economies would be “the single most important shock to the Chinese economy,” and could slow the nation’s GDP growth to 7%. In 2010, China’s economy grew at a robust rate above 10%, and is forecast to grow more than 9% in 2011.

Meanwhile, JPMorgan Chase trimmed its fourth-quarter U.S. GDP annual growth estimate to 1%, down from its previous projection of 2.5%. The bank also lowered its outook for the first quarter of 2012 to a 0.5% annual growth rate from 1.5%, warning that the risks of a recession are “are clearly elevated.

Currencies and commodities: The dollar firmed against the euro and British pound, and was flat versus the Japanese yen. Looks like the dollar may be primed for a teporary run up as the Euro has been a steady down trend. Oil for September delivery slipped $1.50 to $80.88 a barrel, having fallen as low as $79.17 earlier in the session.

Bonds: The price on the benchmark 10-year U.S. Treasury fell slightly, pushing the yield up to 2.09% from 2.08% late Thursday.

Next Week:

MONDAY: Chicago Fed Nat’l Activity Index
TUESDAY: New home sales, Richmond Fed Business Activity Survey, 2-Yr Note Auction; Earnings from Heinz
WEDNESDAY: Weekly mortgage apps, durable goods orders, oil inventories, 5-yr note auction; Earnings from Toll Brothers, Applied Materials, TiVo
THURSDAY: Weekly jobless claims, 7-yr note auction, Medtronic shareholders mtg, USDA food prices outlook; Earnings from Hormel, Pandora
FRIDAY: GDP, corproate profits, consumer sentiment, Bernanke speaks, short-sale bans expire; Earnings from Tiffany

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Is CME Hintng Gold Bulls To Bail

Thursday, August 11th, 2011

U.S. exchange operator CME Group said late Wednesday it is raising the margin requirements for trade in a wide range of gold products, effective Thursday. The speculative margin requirement for a new position in Comex 100 gold futures will rise to $7,425 from $6,075, or to $5,500 from $4,500 for existing “current maintenance” margins. That increases the margin requirement by 22.2 percent. The sharp rally in gold futures, which have risen more than 9.5 percent in the past four sessions, had prompted market talk of a margin rise. A series of CME margin rises on silver in May provoked a massive sell-off in that metal and gave momentum to a slide across commodities markets. An exchange typically raises margin requirements to discourage excessive risk-taking. The CME last changed margins for COMEX 100 Gold Futures on June 16. The Shanghai Gold Exchange will also raise trading margins on three of its gold forward contracts to 11 percent from 10 percent starting Aug. 12.

Historically when margins are raised significantly it tends to cause a bit of sell-off. We’ve seen some of it now, but it’s difficult to see a great deal of selling, because we are in very, very volatile and uncertain times when markets are moving very violently. Gold has proven too much an attraction as an alternative investment and the margins may not have as much influence. The margin hike comes after the U.S. Federal Reserve’s statement to keep interest rates low failed to calm investors reeling from the news of a debt downgrade of the United States. A sharp fall in French bank stocks on Wednesday added to concern that the euro zone sovereign debt crisis could spread further.

Has the CME signaled that Bull rally is over with an early warning shot? I believe so. When the CME imposed a similar margin requirement followed by 3 additional margin restrictions, silver dropped from $50 to $38 in a matter of days. But who knows, if past history is any indicator of the future, I would take past history as a pretense.

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Thrashing On Wall Street; US Markets Erase Yesterday’s Gain

Thursday, August 11th, 2011

The Dow Jones industrial average (DJIA) lost 520 points, or 4.6%, to 10,720. The index ended the day near session lows. The S&P 500 (SPX) fell 52 points, or 4.4%, to 1,121. 1120 in the S&P remains a key factor of support. Stocks were led lower by the financial sector. On Wednesday afternoon CEO of embattled Bank of America (NYSE:BAC) Brian Moynihan tried to reassure investors that conditions at the bank and in the country are much better than they were four years ago when the financial crisis hit. BofA has fallen nearly 50% so far this year. On Wednesday, shares of French bank Societe Generale tumbled 15% on the Paris stock exchange amid speculation that France, Europe’s second-largest economy after Germany, may be first to face a rating cut. European banking shares also fell sharply. Deutsche Bank’s (NYSE:DB) stock dropped 12% while Spanish bank Banco Santander (NYSE:STD) dropped 9.5%. Even though the major rating agencies have reiterated France’s AAA rating, there’s growing concern that France could get downgraded, which caused the markets to drop further. Ahead of the opening bell Wednesday, the New York Stock Exchange invoked Rule 48, which gives the exchange the right to pause trading in the event of extreme volatility. The NYSE typically invokes the rule several times each year. Wall Street’s most widely cited measure of volatility and fear in the market, the VIX, surged almost 22% to 43. A reading higher than 30 is considered a sign that investors are getting worried, but the VIX is still way below the peak level of almost 90 hit in October 2008 — after Lehman Brothers collapsed.

Gold

Gold futures kept the winning streak alive today, tagging another record high. Tuesday’s decision by the Federal Reserve to keep interest rates extremely low, coupled with uncertainty about the fate of France’s credit rating, only strengthened the commodity’s “safe haven” allure. Against this backdrop, gold for December delivery added $41.30, or 2.4%, to close at $1,784.30 an ounce. Earlier in the session, the contract topped out at an all-time best of $1,801 an ounce. Gold, which doesn’t pay dividends or interest and costs money to store, has become more attractive amid low interest rates. A rise in real interest rates is one of the drawbacks of gold investing, as it encourages investors to sell the metal rather than missing out on higher-yielding assets. Worries about weak global growth and currency debasement have also driven gold higher, especially in recent days amid turmoil following the Standard & Poor’s downgrade of U.S. debt and a string of disappointing economic data. The “opportunity costs of holding gold remain extremely low. Furthermore, there is also a risk of inflation rising further should the Fed actually loosen the monetary policy even more.

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