Money and Metals

A report on the troubles in Thailand. "Stocks dropped suddenly Tuesday after Thailand's military launched a coup against the country's prime minister. Traders watching Thailand closely are certain to remember how trouble in the kingdom had worldwide implications in the past: The Asia currency crisis that erupted in 1997 began with the devaluation of the Thai baht, then snowballed into a currency crisis in emerging markets around the world."

"The baht fell sharply Tuesday, as did Brazil's real, which also tumbled in the '97."

From Bloomberg. "Canada's dollar fell to a one-month low as inflation cooled and crude oil tumbled to the weakest since March. A slower pace of inflation bolstered speculation the Bank of Canada will keep borrowing costs on hold this year. Sinking prices of the nation's commodity exports further undermined the currency."

"'You've got a combination of factors which are going against the Canadian dollar,' said C.J. Gavsie, BMO Capital Markets in Toronto. 'Oil has given up $2 in a day. That massive plunge sped up the correction,' meaning the currency's drop, he said."

From Reuters. "Gold tumbled after early short-lived gains on Tuesday as investor confidence remained fragile after last week's huge sell-off and ahead of this week's U.S. Federal Reserve meeting. Silver sank 2.9 percent and failed to hold above the $11 an ounce mark as technical fund selling continued to pressure the precious metals complex."

"Gold hit a high of $588.50 an ounce in Asian trade before falling as low as $576.40. It was last at $576.70/578.20 in New York, against $586.20/7.70 late on Monday."

"Dealers said precious metals and energy markets now looked to be in a 'rally-sold' mode, as any move higher tends to be met with renewed selling because technical indicators appear very oversold."

"'Technical funds have been shorting the gold market, the silver market and selling the energy market as well, so you have new shorts in the market who I think are defending positions and selling on rallies,' said Mike Guido, director of hedge fund marketing at Societe Generale in New York."

"Prices got little in the way of safe-haven support from a crisis in Thailand, as gold mostly tracked crude as well as a stronger dollar."

"The dollar firmed against the euro in choppy trade after a sharp decline in U.S. housing strength and inflation in August, supporting the view that the Federal Reserve will keep interest rates steady. The Fed meets on Wednesday to decide on rates, after its first pause after 17 straight rate increases at its last meeting."

"In related news, gold reserves of euro zone central banks fell 499 million euros in the week to Sept. 15, the European Central Bank said. The fall was due to sales of gold by three Eurosystem central banks and some traders said the figure suggested a sale of about 34 tonnes of gold during the week."

"In other metals, silver fell as low as $10.79 an ounce before ending at $10.80/10.87, compared with $11.12/11.19 previously. Platinum eased to $1,150/1,155 an ounce, while palladium was at $312.5/317.50 an ounce from $307/312."