Gold Rises to 27-Year High on Record Oil Price; Silver Advances Gold gained to a 27-year high in London as rising prices for commodities such as crude oil spurred investors to increase their holdings of the metal. The Reuters-Jeffries/CRB Index of 19 commodities yesterday closed at a 14-month high. Crude oil extended gains today to a record $87.13 a barrel. Investors have bought 2.7 million ounces of gold through exchange traded funds, or ETFs, in the past five weeks, half the increase for all of 2007, according to estimates by South Africa's Macquarie First South. ``The ETFs are actually driving the gold price because there's so much money going into ETFs,'' said David Hall, an analyst at the brokerage in Johannesburg. ``If oil goes up, then you often see the gold price go up.''
Gold could hit $3 000 in 10 yrs Madison Avenue Research Group on Tuesday said its outlook for gold remains "extremely bullish". In its 2007 update and 2008 gold price forecast, it said its outlook as articulated seven months ago was shared with Louise Yamada, managing director of Yamada Technical Research Advisors in New York. The former head of technical research at Citigroup, Yamada predicted that gold would surpass US$730 on its way to US$3 000 within a decade. "Gold is the purest play against the dollar," Yamada was quoted as saying. Regarding its 2008 gold price forecast, Madison Avenue Research Group said its near-term prognostication on gold echoes that of Robin Wilkin, technical analyst at JP Morgan, who said he was bullish on the metals complex and bearish on the dollar.
Capital flows to U.S. dive in August In a reflection of the financial turmoil that marked the month, capital flows to the U.S. dropped off dramatically in August, falling by $163 billion, the Treasury Department reported Tuesday. The monthly number includes the change in banks' dollar-denominated liabilities, which made up most of the loss. Those liabilities plummeted by $111.4 billion in August, a reversal after having risen by $40.9 billion during July. The monthly loss marks the lowest level since March 2001. At the same time, investors bought $21 billion in Treasury bills in August. Analysts had expected a flight into short-term assets as the credit and stock markets took a beating.
Oil price reaches new highs on fears of Kurdish conflict Oil prices burst through $86 a barrel to reach new highs yesterday on the back of growing energy demand forecasts and fears that escalating conflict between Turkey and Kurds in northern Iraq could hit supplies in the Mediterranean. Crude ended at a record level on Friday but has since gone on to hit even greater peaks of $86.13 as the Organisation of Petroleum Exporting Countries (Opec) said demand for its products would average 31.43m barrels a day in the fourth quarter of 2007, up 100,000 barrels a day on previous estimates. Soaring oil prices helped push gold to a 28-year high yesterday as investors were attracted to precious metals because of global uncertainty and the falling dollar. Platinum also swept to record highs on concerns about supply as demand remains strong.
Bernanke Says Housing to Remain `Drag' on U.S. Growth Into 2008 Federal Reserve Chairman Ben S. Bernanke said the housing industry's contraction will be a ``significant drag'' on U.S. growth into next year, though evidence of a broader impact on spending is limited. ``It remains too early to assess the extent to which household and business spending will be affected,'' Bernanke said in a speech to the Economic Club of New York late yesterday. The Fed ``will continue to watch the situation closely and will act as needed to support efficient market functioning and to foster sustainable economic growth and price stability,'' he added. Bernanke, as Vice Chairman Donald Kohn did two weeks ago, pointed out risks to both growth and inflation, declining to signal whether he favors lower interest-rates. Investors pared expectations for a cut this month after retail sales and jobs increased in September, suggesting consumers are weathering the worst housing slump since 1991 and reduced access to credit.
First boomer applies for Social Security The baby boomers' stampede for Social Security benefits has begun. The nation's "first" baby boomer, a retired teacher from New Jersey, applied for Social Security benefits Monday, signaling the start of an expected avalanche of applications from the post World War II generation. Social Security Commissioner Michael Astrue called it "America's silver tsunami." Kathleen Casey-Kirschling applied for benefits over the Internet at an event hosted by Astrue. Casey-Kirschling was born one second after midnight on Jan. 1, 1946, gaining her recognition as the first baby boomer — a generation of nearly 80 million born from 1946 to 1964, Astrue said.
Chinese bank seeks Bear stake China could be taking a bite out of Bear Stearns China Citic Group, the investment arm of China's cabinet, said it is bidding for a stake of the U.S. bank. China Banking Regulatory Commission Vice Chairman Jiang Dingzhi made the announcement during a meeting at the Communist Party Congress. He did not give details about the size of the stake or how much Citic would pay. "At the moment, Bear Stearns is a bargain," Arthur Lau, money manager at JF Asset Management in Hong Kong, told Bloomberg News. "For China, it's important to have a platform to learn what investment banking is." Bear Stearns has been rumored to be seeking a partner after the investment bank was slammed by the mortgage troubles this summer and the bank reported a 61% drop in profit for the third quarter.
Gold futures top $760 to trade near a 28-year high Gold futures climbed more than $6 an ounce in electronic trading Monday, sending the December contract to the highest level a front-month futures contract has seen since 1980. Analysts attributed the gains to everything from investors diversifying assets to safe-haven buying against a backdrop of tension between Turkey and Iraq. Gold for December delivery touched $760.80 at its peak in electronic trading as of 4 a.m. U.S. Eastern. That was the highest intraday price a front-month contract has seen in almost 28 years. "We are now seeing channels of buying interest," said Frederic Panizzutti, senior vice president at Swiss-based MKS, one of the world's largest precious metals traders and refiners.
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