Money and Metals

The US government had some numbers out this morning. "U.S. consumer prices fell 0.6 percent in November, the largest decline in 56 years, as energy prices posted a record 8.0 percent drop in the month. The slide in prices was slightly larger than the 0.4 percent reversal expected by Wall Street and was the biggest decrease in prices since July 1949."

"Gasoline prices dropped 16.0 percent, the largest monthly decline according to records dating back to 1967, while fuel oil costs fell 6.1 percent and natural gas prices fell 0.5 percent. Electricity prices rose, however, by 3.8 percent, the largest increase in records dating back to 1952."

Gold markets 'bounced' overnight. "Gold futures climbed back above $510 an ounce Thursday following a two-session decline that subtracted more than $20 an ounce from the metal's value. Prices tested the 20-day moving average this morning, said Dale Doelling. 'If gold manages to hold here, then the market could just turn and make new highs before the year ends.'"

"But gold could also 'pull the entire metals complex lower if it manages to log consecutive closes below the $500 mark,' he said. 'If that were to happen, we could be in for an ugly end to, what so far has been, a stellar year for these markets.'"

"As the Japanese yen shot up versus the dollar, it prompted Japanese investors, heavy buyers of gold on Monday, to perform a U-turn and hit the sell button. Investors have been steadily buying gold on concerns about rising energy costs, dollar stability and fears of terrorist attacks, but the latest push came specifically from Japanese investors looking to hedge currency concerns."

"Platinum and palladium, both used in jewellery and car autocatalysts, fell to their lowest in just over a month, as the sell-off spilled over into these markets. Both recovered partially later following gold's bounce, with platinum last at $954/957 from $962/966 in New York, while palladium was at $257/261 an ounce from $260/264."

"Silver, which put in the steadiest performance of the day, rose to $8.50/8.53 an ounce from $8.38/8.41."