Gold Futures Hit New Record Highs

U.S. 10-year Treasury bonds fell today after two days of rallying that saw
fresh 3-year record highs. Bonds have rallied in the past months on growing
concerns for the U.S. economy, with traders speculating that the housing and
credit problem could derail the U.S. economy and send the country into a
recession. Many traders are betting that a recession is already underway. Bonds
typically rally on weakness and fall on strength, so despite today’s slight
drop, traders have positioned themselves defensively heading into the new year.

The majors were mixed today after weak housing numbers were released in the
U.S. Despite equity weakness, the yen fell against the dollar and the euro. The
carry trade has been the driving motivator for yen movement in the last months.
Traders have been buying yen on equity weakness, and selling yen on equity
strength. Today, equity weakness did not play a part in yen movement. The euro
was up slightly versus the dollar, and is trading just off recent all-time
record highs.

Crude oil rallied over 2% today, on general sentiment that yesterday’s losses
were overblown. Traders bought oil today on concerns that global demand will
outpace supply in 2008, which has been the main motivator of crude’s current
rally. Last week crude hit $100 a barrel before falling back. Natural gas was up
moderately today.

Gold rallied to new all-time highs, gaining over 2% on widespread safety
buying. Gold normally trades inversely to the dollar and with crude oil. Today,
traders focused on rising oil prices, and bought gold as a safety. The dollar
was mixed today, and had less of an impact on gold prices than oil.

The major indexes recorded heavy losses today, after a rosy opening.
Countrywide Financial led the downside, as traders laid heavy bets on bankruptcy
rumors. Click

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Stock Market Recap
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Economic News

U.S. Pending home sales fell 2.6% in
November, more than expected.