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Gold rises above $830 over Pakistan
The Times
December 28, 2007
Gold put in a stellar performance again after fears of political instability in Pakistan in the wake of the assassination of opposition leader Benazir Bhutto sparked a flight to safety.
Gold has traditionally performed well in times of uncertainty and has maintained its reputation as a safe-haven investment despite recent price volatility.
The precious yellow metal was trading $11.47 firmer at $836.77 at 17:35 after safe-haven buying triggered a new test of previous multi-decade highs.
Spot prices had been languishing well below the US$830 an ounce mark when they were jolted from a month-long slumber yesterday afternoon as news of Bhutto’s death aroused concerns over heightened geopolitical tension.
The metal climbed to US$830.50 on the news but a brief round of profit taking saw it finish slightly easier yesterday at $827.50.
Bhutto died when an attacker shot her and then blew himself up as she left a political rally in Rawalpindi, a city near the capital where Pakistan’s army has its headquarters.
It was the second suicide attack against her since her tumultuous homecoming from an eight-year exile in October.
Her assassination has sparked nationwide grief and fury, while unrest risks tipping the volatile country into chaos.
Bhutto was buried earlier today and along with her the promise of restoring democracy in Pakistan.
“For the moment resistance at the $830 level appears to be capping gold, however with the dollar under pressure and violent protests seen in Pakistan it is likely that gold could see further safe-haven investment demand, and potentially rise to challenge this years high around $845.60,” said James Moore of TheBullionDesk.
With political tensions providing the environment of uncertainty that gold enjoys, the momentum in gold prices remains to the upside for now.
Oil steady near $97 on lower US stocks, Bhutto
Reuters
December 28, 2007
Oil rose on Friday on U.S. supply concerns, the slumping dollar and mounting tensions in Pakistan and northern Iraq.
U.S. crude traded up 23 cents to $96.85 a barrel by 12:05 p.m. EST. London Brent gained 12 cents to $94.90 a barrel.
A U.S. government report on Thursday showed unexpectedly large draws in crude and distillate inventories in the world’s top consumer. U.S. crude inventories are now at their lowest level in nearly three years, adding to winter supply worries that helped push oil to nearly $100 in November.
“Escalating geopolitical tensions, tightening oil supplies and a weakening dollar would seem to stack the deck in favor of further upward movement,” said Mike Fitzpatrick, vice president at MF Global.
The assassination of Pakistani opposition leader Benazir Bhutto on Thursday stoked geopolitical concerns, although Pakistan is not a major crude producer and unrest is unlikely to directly affect oil flows.
“The Bhutto story will keep being a factor into next week, and it should help keep a floor under the market, along with the other geopolitical uncertainties,” said a New York broker.
Forex – Dollar falls continue on weak US data; Euro at record high vs pound
Thompson Financial
December 28, 2007
The dollar fell across the board, coming under further pressure after a string of weak US data, while yet another disappointing report on the UK housing market pushed the euro to fresh record highs against the pound.
Yesterday’s unexpectedly weak US durable goods orders data added to fears about the state of the US economy and increased the likelihood that the Federal Reserve will need to cut interest rates further next year.
‘US economic data continues to disappoint the market with yesterday’s worse-than-expected durable goods orders for November adding further downside pressure to the greenback,’ said James Hughes, market analyst at CMC Markets.
The European Central Bank by contrast is not expected to temper its hawkish rhetoric any time soon, particularly with regional German inflation figures suggesting that the inflation pressures it warned of have not gone away.
The euro rose to a 15-day high against the dollar of 1.4682 usd, but it also staged fresh gains against the pound, hitting a new record high of 0.7350 stg.
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