A Bullish Start of the Week

[jonydeb]

Gold hit another record high on Monday, doing a great job as a hedge against inflation and sluggish economic growth, while oil price rose on a weaker dollar and supply concerns. December contract saw a fresh high above $1,167 an ounce, which insures that the precious metal is extending its winning streak into a seventh session. .

Many investors have been reducing their positions and cutting risk – in the other commodities and securities -as a strong year begins to wind down and with economic indicators still showing poor evidence of a sustained recovery.

Many traders and funds began to focus on year end and on how they should be positioned into the normally quiet month of December. The dollar, which often rises in times of increased uncertainty and worries about global growth, gave up early gains to slide 0.5 percent against a basket of currencies. While the commodity-linked Australian dollar benefited from the strong gold price.

Helped by its safe-haven allure and purchases by a number of central banks, gold has shot higher since the start of November, hitting a succession of record highs and gaining more than 12 percent in the past three weeks.

On the other side, crude oil futures rose 1 percent to $78.24 a barrel, supported by heightened tensions between Iran and Western nations especially since Sunday which raised speculation of a possible supply risk.

At the end of last week the crude came sharply lower on Friday breaking down to 76.76 before corrective pressure kicked in. But whenever there are political tensions, investors and countries worry about supply of crude especially during war games like the ongoing.

On the FX Screens, we see the Pound is trying to pick up from 2-week low at 1.6460, and the pair crawled up from 1.6470 low to levels around 1.6550 reaching so far high at 1.6600. The Euro has taken off Friday’s weakness and, after bouncing at 1.4800, the pair has rallied about 140 pips approaching 1.5000.