Gold Spot gold was trading at $665.70/666.20 an ounce as of 1215 GMT.
Gold has again traded sideways in Asia and Europe after yesterday's very slight sell off of 0.4%. Gold performed well considering the sell off in the stock markets with the Dow Jones down by more than 2% and gold's slight correction seems to have been due to the USD's recent strength.
Gold has been very resilient despite all the market volatility of recent weeks. This is especially the case in the medium to long term.
There has been and continues to be very strong physical demand for gold at these levels and with the housing, mortgage and credit crisis in its early stages, gold will likely see increasing safe haven buying in the coming months.
The U.S. economy and thus the USD's fundamentals remain very poor and the USD is very far from the 'safe haven' that some more sanguine commentators would have us believe (see Forex and Gold below). This is further evidenced in the fact that it is no longer just subprime mortages that are defaulting. There is increasing evidence of Alt-A and 'jumbo mortgages' of over $500,000 being increasingly affected by the credit crisis and defaults on credit cards have increased sharply. Credit card companies have written off 30 percent more payments during the first half of this year versus a year ago.
Silver Spot silver is trading at $11.79/11.81 an ounce (1215 GMT).
PGMs Platinum was trading at $1255/1260 (1215 GMT). Spot palladium was trading at $324/329 an ounce (1215 GMT).
Forex and Gold The Federal Reserve's likely interest rate cut is unlikely to be the miracle to cure the increasingly precarious US housing and mortgage market but may simply buy time prior to an inevitable sharp slow down in economic growth and an increasingly likely recession. The fallacy that central banks are all powerful and can prevent the inevitable working of business and economic cycles and create perpetual economic growth through credit creation will be seen for what it is - a simplistic and dangerous fallacy.
The poor fundamentals (as manifested in the continued deterioration of the U.S. housing and mortgage markets, the huge debt levels of both consumers and the Federal government and a developing derivatives, banking, credit and systemic crisis) will result in the USD falling in the coming weeks and months as predicted by Goldman Sachs who have said that the USD will fall to $1.43 against the EUR in the next three to six months. Citigroup concur and are calling for $1.42 by year end.
Oil Oil remains at its recent elevated levels and was steady as mounting concerns over the health of the U.S. economy may have slightly overshadowed worries that U.S. refinery outages could drag down fuel inventories in the world's top consumer. U.S. crude was down 10 cents to $71.63 a barrel by 1200 GMT. London Brent was up 2 cents at $70.57.
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