Oil, Gold Rise As Investors Wait On Iran
U.S. 10-year bond yields remained near March lows, after
housing reports this week solidified notions that the economy is slowing down.
Sales of existing and new homes dropped considerably during the month of July,
which will probably lead to Fed to keep interest rates at their current levels.
Some investors have speculated that with inflation at bay and the economy
slowing down, the Fed will be forced to lower rates going into and through the
year 2007.
The dollar rallied against the yen and treaded water against
the euro today. The yen was weakened after a Japanese reports showed a
smaller-than-expected increase in consumer prices, which would hamper arguments
for a rate hike in the country. Japan had been scheduled to raise rates
before the year is out, but with little inflation to worry about, the BoJ will
probably not need to raise interest rates. The dollar traded flat against
the euro; the ECB is scheduled to raise rates before the year is out, with some
investors speculating the need for 2 separate hikes to control a growing
European economy.
Crude oil rose 0.5% to close at $72.70 as a new storm could
form into a hurricane in the Gulf of Mexico. Investors were reminded of
Katrina and the supply and energy problems which plagued the gulf states
immediately after the storm. Crude has also been seriously affected by the
fighting in the Middle East, especially with Iran’s nuclear program.
Natural gas also rose on the hurricane news to trade up 1.7%.
Gold futures rose 0.3% to close at $630.50 as investors
continue to seek a safe-haven investment in the light of geopolitical tensions.
Investors continue to eye Iran, and look to hedge against a serious energy
crisis. Oil has been trading hand-in-hand with gold over the last few
months, so look for that trend to play into the future. Silver and copper
also rose, both up around 0.5% for the day.
The softs traded lower across the board. Cocoa was down
just over 1%, coffee fell 0.8%, orange juice fell 0.1% and sugar was flat on the
day.
Grains traded mixed for the day. Corn was down 1%, wheat
was up 0.8%, soy was down 1.5% and oats were down 0.6%.
Meats traded with fractional change. Cattle were up
0.25% and porkbellies had little change.
Bernanke Says Benefits Of Globalization “Large Indeed” (full
story).
John Patrick Lee