Japan's grannies drive up gold prices Gold has soared to a fresh 28-year high of $760 an ounce on fears of global currency disorder and a surge of buying by Japanese investors using exotic trading signals. Traders report a sudden burst of activity on the TOCOM gold futures markets in Tokyo as the price breaks through the psychological barrier of 3,000 yen (£12.52) per gramme, the measure used by the Japanese to trade gold. The country's irrepressible grannies rely heavily on Ichimoku "cloud charts", multi-faceted indicators designed to give support/resistance levels in various markets, which have issued a powerful buy signal in recent days. John Reade, head of precious metals at UBS, said the Japan can be a major driver of the gold price. "Japanese buying can come out of the blue, but it is too soon yet to tell whether they are about to take over the gold market," he said. "When the Japanese public move in with reckless abandon, everybody else gets out of the way.
Dow 22,000 vs Gold $1,500 Remember a few years ago when several books were published with titles, like, Dow 40,000, Dow 22,000, Dow 36,000, Dow 39,000. This was in late 1999 and early 2000 at the then top of the internet bubble and with the Nasdaq and the Dow hitting highs. Exuberance was everywhere. At that time, many of us dismissed these forecast as they were largely based upon a growing U.S. economy propelled by the demographics of the coming baby boomer generation. The theme was the peak would arrive in 2009 or so.What then seemed like a 'fantasy' or pipe dream forecast of a Dow at 22,000, much less 40,000 is now becoming a more realistic projection but for perhaps different reasons. It's all about the U.S. dollar. We don't recall those forecasting a Dow 22,000 envisioning a declining U.S. dollar.
Inflation heats up on food, energy U.S. consumer prices increased 0.3% in September on higher food and energy prices, but core inflation remained more moderate, rising 0.2% for the fourth month in a row, the Labor Department reported Wednesday. The 0.3% increase in the consumer price index was the biggest since May. The figures came in exactly as expected by economists surveyed by MarketWatch. The CPI figure is used by the Social Security Administration to set next year's cost-of-living adjustment for benefits received by about 50 million Americans. COLA will rise 2.3% in January to match the gain in the CPI for workers over the past four quarters. The core CPI rate, which excludes food and energy prices to provide a better look at inflationary trends, has risen 2.1% in the past year, close to the Federal Reserve's unofficial comfort zone.
September housing starts fall to lowest level in 14 years U.S. home builders continued to cut back in September, starting construction on the lowest number of new homes in more than 14 years, the Commerce Department reported Wednesday. Housing starts fell 10.2% to a seasonally adjusted annual rate of 1.19 million, the lowest since 1.32 million in March 1993. The decline was larger than expected. Meanwhile, building permits dropped 7.3% in September to a seasonally adjusted annual rate of 1.23 million, the lowest since July 1993 and less than the 1.28 million pace expected by economists surveyed by MarketWatch. "There is no end in sight to the drop," said Ian Shepherdson, chief U.S. economist at High Frequency Economics. He noted that housing starts fell 66% from 1978 to 1981. "This episode will likely be worse. The housing hit is intensifying," Shepherdson said.
Housing slump on for another year The Mortgage Bankers Association predicts the housing recession will last until the end of the third quarter next year. And if confidence isn't restored in the credit markets, the wait could extend until 2009, the group's chief economist said. In the meantime, the slowdown in housing has become a primary cause in the slowing of the national economy, said Doug Duncan, chief economist of the group. "Tough times," he said, after sharing the group's loan production estimates during a briefing with reporters on Tuesday. Tough times indeed. Local real-estate markets will vary, but overall there's a great deal of housing inventory that needs to diminish before housing recovers, Duncan said. "Anyway you look at it, there are massive supplies of homes that have to be worked off the marketplace before we return to an increase in activity, and certainly in terms of construction," he said.
Retail motor fuel prices ready to catch up with oil With crude-oil prices at their highest levels ever, consumers are starting wonder why retail fuel prices have been slow to catch up. The short answer would be lower fuel demand, but the long answer is that it'll come in time. "Consumers have been fortunate the last two months because fuel prices have remained stable in the face of rising crude-oil prices," said Geoff Sundstrom, a spokesman for motorist group AAA. Crude for November delivery climbed past $88 a barrel during Tuesday's trading session on the New York Mercantile Exchange. That's a level a front-month contract has never seen before. But the relatively stable average national price for gasoline won't likely last long. "Refiners will eventually have to pass on the higher cost of crude oil to consumers," Sundstrom said. Japan and China lead flight from the dollar Japan and China led a record withdrawl of foreign funds from the United States in August, heightening fears of a fresh slide in the dollar and a spike in US bond yields. Data from the US Treasury showed outflows of $163bn (£80bn) from all forms of US investments. "These numbers are absolutely stunning," said Marc Ostwald, an economist at Insinger de Beaufort. Asian investors dumped $52bn worth of US Treasury bonds alone, led by Japan ($23bn), China ($14.2bn) and Taiwan ($5bn). It is the first time since 1998 that foreigners have, on balance, sold Treasuries. Mr Ostwald warned that US bond yields could start to rise again unless the outflows reverse quickly. "Woe betide US Treasuries if inflation does not remain benign," he said. 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.''
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