Thursday, November 02, 2006

 

Gold Moves Ahead, Oil, US$ Fall

MarketWatch reports on the markets. "Gold futures climbed to their highest level in two months Thursday to tally a two-session gain of $21 an ounce as weak U.S. economic data pushed the dollar lower against major currencies, spurring investment demand in gold. 'A report showing U.S. productivity slumping to nil certainly had financial markets doing a big double-take,' said Jon Nadler, an analyst at bullion dealers Kitco.com."

"Gold for December delivery closed up $8.50 at $627.80 an ounce on the New York Mercantile Exchange after trading as high as $628.30, the contract's strongest levels since early September. Prices climbed $12.50 on Wednesday, so they're up 3.4% in two sessions."

"'Gold's close Wednesday "above the 100 & 200-day [moving average] and clearance of the $608-$612 chart congestion leaves the metal well placed for further gains with upside resistance pegged at $625 and potentially $645,' said James Moore, an analyst at TheBullionDesk.com"

"But that's 'barring any sudden collapse in the price of oil or surge in the dollar from tomorrow's non-farm payrolls reading,' he said in a note to clients."

"December silver futures climbed 17.5 cents to end at $12.65 an ounce after rising more than 20 cents in the previous session. January platinum closed up $63.50, or 5.6%, at $1,164.20 an ounce, extending Wednesday's over $14 gain. Sister metal palladium saw its December contract also climb $2.65 to close at $326.75 an ounce."

From Bloomberg. "Canada's dollar declined to a two-week low as crude oil prices fell and investors sold the currency amid a proposal increasing taxes for foreign investors owning the country's income trusts."

"Crude prices dropped after supplies increased in the U.S., the world's largest energy consumer, and Kuwait advised OPEC to pause before cutting output further. Yesterday, the dollar dropped 1 percent, the largest decline since June, as investors worried that the tax will reduce inflows into the nation's equity market."

"'The income trust announcement combined with the weaker energy prices is driving the currency,' said Maria Jones, a strategist at TD Securities Inc. in Toronto. 'We should expect a further sell-off for the next couple of days.'"

"Trusts had an advantage over the normal corporate structure because they pay almost no taxes, distributing most of their cash flow each month to investors. RBC Capital Markets Ltd., a unit of Canada's biggest bank, estimates international investors hold 22 percent of the income trust funds with a market capitalization of over C$200 billion."

"Standard & Poor'/TSX Capped Income Trust Index, which measures the sector, plunged 12 percent yesterday, wiping out C$24 billion ($21 billion) in market value. It was down 3.7 percent today."

"The Canadian dollar is the worst performer among the 16 most actively traded currencies versus the U.S. dollar for a second consecutive day."

From Reuters. "The European Central Bank held its interest rate at 3.25 percent on Thursday and signalled credit costs will rise again in December to keep inflation in check and also kept the door open for further hikes in 2007."

"ECB President Jean-Claude Trichet, used as expected, the key phrase 'strong vigilance' to confirm market expectations for a rate to rise to 3.5 percent next month. Acting in a firm and timely manner was essential to control inflation pressures, he said."

"Inflation was likely to overshoot the ECB's 2 percent ceiling both this year and in 2007 and money and credit growth is strong, Trichet said. 'It is clear we are in a posture of strong vigilance. I will say nothing that would distract the present market expectations as regards what could happen until the end of the year,' he told journalists."

"'Over and above our next rendezvous all I can say is: we will do all that is necessary for price stability.'"

Comments:
OT

Just curious, anyone else get hurt on the new ruling in Canada in regards to Trust structuring.

The whole Toronto exchange went down a bit on it wednesday.

It was a loop-hole admitidly, still cought me off guard.

http://biz.yahoo.com/iw/061101/0179080.html
 
ocbear, you might want to follow http://www.billcara.com/archives/2006/11/caras_position_on_cdn_income_t.html#more
 
Thanks Fred,

Right to it.

Man I love Ben's Blogs.
 
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