Is Gold Starting to Lose its Luster?
After last evening’s State of the Union address, stock index futures tumbled.
In his address, President Bush further built his case for a war with Iraq and he
also presented his $674 billion economic stimulus plan. In his speech, President
Bush said that Saddam Hussein is aligned with terrorist groups and that he is
hiding weapons of mass destruction. The President also said that he has new
evidence against Iraq which will be presented by Secretary of State Colin Powell
on Feb. 5.
And as expected, the Fed announcement was a non-event today as the Fed left
interest rates unchanged at the 41-year low of 1.25%. The Fed also said that the
economy should pick up once war worries and high energy prices are pushed aside.
Stock futures reversed course by early afternoon with Dow futures retracing over
140 points. At the close, March Dow futures
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Crude also broke out to a new contract high as comments from the President
signaled that war could be imminent. A war with Iraq would further disrupt the
crude supplies which are already feeling the pinch due to the Venezuelan oil
strike. Iraq currently supplies three percent of the world’s oil supply. Crude
also jumped today as the Department of Energy revealed that in the US for the
week ending Jan. 24, oil supplies fell by 500,000 barrels to 273.3 million.
March crude
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33.63.
The dollar slumped after rising yesterday. The greenback slipped after Bush
said that he is prepared to go to war without the consent of the U.N. At the
close, the March dollar index
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slipped 0.21 to 99.53.
Despite the increasing chances of a war, gold slipped.
February gold
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six-year high earlier in the week.
Treasury futures slipped for the third consecutive session as President
Bush’s economy stimulus plan could cause a wider deficit account. This would in
turn push the government into selling more treasuries. At the close, the
March 10-year contract
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15/32 to 113 23/32 and the 30-year contract
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their respective 20-day moving averages.