We have been concentrating on yen, swiss franc and other non dollar currencies for carry trade. Now it is the time to concentrate on US dollar carry trade. Fed is still pumping of US dollar every day into the US economy to support it and investors invest in non US dollar investments. Carry trade is all about real interest rates and hedging cost. The US dollar has been declining against almost all the currencies, with Fed interest cuts it makes it attractive to take a US dollar loan and invest in other investments. Investors need to get accustomed to the US dollar carry trade.
Nothing new to comment on precious metals, as long as investors dump the US dollar, they will rise. As and when technical factors take precedence over momentum factors precious metals will correct. Energies will also dictate precious metals.
From Israel to Iraq, Iran and now Pakistan, there is some form of geopolitical risk and the US government is actively in them. If under any circumstances, the US policy backfires in either of these nations, it could lead to a war. From Red sea to Arabian sea, there is a political instability. Safe haven demand for gold will rise further. I will be eagerly watching these developments as they could have a long lasting effect on Asian peace and stability.
GOLD -- DECEMBER FUTURE
Gold targets $830-$840 as long as it holds $790 holds. Falls below $790 then $770.
NYMEX CRUDE OIL --FUTURE
Still within striking distance from $100 and can break $100 as long as $89 holds.
Happy Profitable Trading
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-- Posted Monday, 5 November 2007 | Digg This Article | Source: GoldSeek.com
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