Money and Metals

The Associated Press reports on currencies. "The dollar rose against most major currencies Thursday after a government report showed the largest decline in weekly jobless claims in six months. The Labor Department reported Thursday that the number of newly laid off workers filing claims for unemployment benefits fell to 324,000, a drop-off of 34,000 from the previous week."

"In afternoon New York trading, the 12-nation euro bought $1.3280, down from $1.3285 late Wednesday in New York. The British pound also slid to $1.9620 from $1.9658. The dollar strengthened against the Japanese currency, edging up to 115.29 yen from 115.26 yen late Wednesday."

"Earlier on Thursday, the European Central Bank raised its key interest rate a quarter of a point to 3.5 percent as widely expected. While ECB President Jean-Claude Trichet said that the bank will continue to monitor inflation, he failed to use the term 'strongly vigilant,' a phrase that has often hinted at a future rate hike."

"Meanwhile, the Bank of England held its key interest rate steady at 5 percent Thursday, which was also expected after increases in August and November took rates to the current five-year high."

From Bloomberg. "The Australian dollar traded near a 20- month high on speculation investors will be attracted to the higher returns available on the nation's government bonds."

"The yield premium investors earn by holding Australian 10-year debt instead of like-dated U.S. Treasuries is close to a 17-month high on bets the interest rate gap between the nations will widen. The yield gap increased yesterday after a government report showed employment rose three times as much as economists forecast in November, bolstering demand for the currency."

"'The Australian dollar will open stronger,'' said Danica Hampton, a currency strategist at Bank of New Zealand Ltd. in Wellington. 'The labor market remains strong and supports our view that the Reserve Bank of Australia will hold its tightening bias.'"

"Gold rebounded in New York as the lowest prices in two weeks attracted investors seeking an alternative investment to a weaker U.S. currency. Gold dropped 1.9 percent yesterday, the most in six weeks, after the dollar halted its decline against the euro."

"'There's some support' for gold, said Marty McNeill, a trader at R.F. Lafferty Inc. in New York. 'You have a comeback from yesterday. It was overdone on the downside.'"

"Gold futures for February delivery rose $1.10, or 0.2 percent, to $637 an ounce on the Comex division of the New York Mercantile Exchange. Prices earlier touched $629.20, the lowest since Nov. 21."

"ECB rates are at the highest since October 2001. Fed officials are expected to announce a decision on rates on Dec. 12. 'I'm looking for the market to climb,' said Carlos Perez- Santalla, a precious-metals trader and president of Hudson River Futures in New York. 'Gold is going to take its cue from the dollar.'"

"Some analysts say the Fed is more likely to keep rates unchanged or raise them next year, limiting gold's gains. 'I don't believe the dollar's collapsing yet,' said Leonard Kaplan, president of Prospector Asset Management in Evanston, Illinois. 'The Fed holds steady, and gold goes lower from here.'"

"A government report tomorrow may show that employers added 100,000 jobs in November, compared with 92,000 the prior month, according to a Bloomberg survey of economists. A gain would support a Fed decision to keep rates unchanged."