Gold Rises to Record; Silver at 27-Year High on Dollar's Slump Gold rose to records in London and New York and silver gained to a 27-year high as the dollar's all- time low spurred demand for precious metals as a hedge against inflation. Palladium rose to the highest since 2001. Gold is up 15 percent this year as a U.S. housing slump and turmoil in credit markets led the Federal Reserve to lower interest rates when commodities were rising to records. The dollar declined on speculation Fed Chairman Ben S. Bernanke will signal more rate cuts in testimony to Congress today. ``With a weaker dollar, imports become more expensive and that can import inflation into a country,'' said Ben Davies, chief executive officer of Hinde Capital Ltd. in London who helps manage the Hinde Gold Fund. ``The Fed wants to inflate their way out of the problems of a huge deficit and a banking system that's at the point of imploding.''
Dollar Index to Fall to Record, Bank of America Says -- The dollar will fall to a record low against the currencies of its trading partners ``within weeks'' as the Federal Reserve cuts interest rates to prevent a recession, according to Bank of America Corp. The U.S. currency, which slid to a record low of $1.5047 per euro earlier today, will trade below $1.50 for the next few weeks, Robert Sinche, head of global currency strategy, wrote in a report. The dollar index traded on ICE Futures in New York, which tracks the currency against six counterparts, fell 0.2 percent to 74.639 at 2:47 p.m. in Tokyo. It reached 74.484 on Nov. 23., the lowest since the gauge started in 1973. ``The dollar will continue its weak trend for the time being,'' said Tomoko Fujii, head of Japan economics and strategy at Bank of America in Tokyo, confirming a research report dated today. ``For the foreseeable future, the Fed will favor supporting the economy more than fighting inflation.''
Business investment weakens in January Demand for durable goods fell back in January after a burst of orders in December, the Commerce Department reported Wednesday, another sign that the economy is slowing. New orders for durable goods fell 5.3% in January, close to the 5.1% drop anticipated by economists surveyed by MarketWatch. Much of the decline in January was due to the unwinding of the flood of orders for aircraft in December. Declining demand was seen in almost every industry in January, however, despite reports of higher exports. Orders for core capital equipment -- nondefense, nonaircraft capital goods -- fell 1.4% in January after a 5.2% rise in December.
Fannie Mae swings to losses for quarter and year Mortgage-finance giant Fannie Mae on Wednesday posted losses for the fourth quarter and for all of 2007, citing the continuing drag in the housing and mortgage markets and disruptions in the credit markets. For the quarter, Fannie swung to a loss of $3.80 a share from profit of 49 cents in the year-earlier period. Chief Executive Daniel Mudd said the company is pleased that demand for its mortgage guaranty business has surged in response to the market's need for liquidity. But he said that "this positive trend has been far outweighed by the negative financial impacts of rising mortgage defaults, falling home prices and extraordinary disruptions in the credit markets." Looking ahead, the company sees home prices falling 5% to 7% across the country this year.
Oil hits a high; some in U.S. see $4 gas by spring Gasoline prices, which for months lagged the big run-up in the price of oil, are suddenly rising quickly, with some experts fearing they could hit $4 a gallon by spring. Diesel is hitting new records daily and oil closed at an all-time high on Tuesday of $100.88 a barrel. The increases could not come at a worse time for the economy. With growth slowing, high energy prices that were once easily absorbed by consumers are now more likely to act as a drag on household budgets, leaving people with less money to spend elsewhere. These costs could exacerbate the nation's economic woes, piling a fresh energy shock on top of the turmoil in credit and housing."The effect of high oil prices today could be the difference between having a recession and not having a recession," said Kenneth Rogoff, a Harvard University economist.
Americans no longer able to support world’s biggest economy Alan Greenspan, the former chairman of the US Federal Reserve System, is certain that it is nearly impossible to rapidly retrieve the economic growth in the USA. "As of right now US economic growth is at zero. We are at stall speed," Greenspan said during an investment conference in Saudi Arabia. According to Greenspan, the US recession may last longer than expected against such a background. Wall Street giants – Goldman Sachs and Merrill Lynch – share a similar point of view. Experts of both firms say that the US economy will continue to decline in 2008. According to estimates from the FRS, the growth in 2008 will make up from 1.3 to 2 percent.
Wheat prices hit record high Dressed in his white apron and baker's hat, Jose Espinal puts the finishing touches on a chicken pot pie that will be sold to customers of Cucina & Co. later in the day. He carefully places a crust on the pie and crimps the top and bottom together. But to make the dough for about 300 pies, Mr. Espinal, the pastry chef, used 22 pounds of flour – an item that the store knows will soon be rising in price. "I'm expecting it this week," says Michael Salmon, director of operations of Cucina, which is in Macy's in Manhattan. "Maybe 20 or 30 percent." Why the increase? The prime ingredient in flour is wheat, which these days is acting more like oil – rising sharply on commodities exchanges. On Monday, the price of March spring wheat on the Minneapolis Grain Exchange shot up to $24 a bushel, the highest price ever.
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