Commodities - Technical Analysis

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Saturday, November 24, 2007

Bullion - Gold n Silver

Gold jumped 3.3 percent, capping the biggest weekly gain since July 2006, as the dollar's decline to a record against the euro and climbing energy costs sparked demand for the metal as a hedge against inflation.

The price of gold has surged 29 percent this year, and the dollar is down 10 percent to the lowest ever against a basket of six currencies, including the euro and the yen. Crude oil closed above $98 a barrel, and heating oil climbed to a record.

The dollar dropped to a record $1.4967 against the euro, the weakest since the single European currency's debut in 1999. Gold has rallied during five of the past six bear markets for the dollar.

The dollar index on ICE Futures U.S., formerly the New York Board of Trade, measures the U.S. currency against the weighted values of the euro, yen, pound, Canadian dollar, Swedish krona and Swiss franc. The index touched 74.484 today, the lowest ever.
Gold also gained on heightened speculation that the Federal Reserve will lower borrowing costs. Interest-rate futures indicate a 98 percent chance the Fed will lower its benchmark lending rate by a quarter point to 4.25 percent at its December meeting.

The central bank lowered the benchmark rate by 0.25 percentage point to 4.5 percent on Oct. 31, driving gold to a 27-year high of $848 on Nov. 7.

Silver futures for December delivery climbed 31.5 cents, or 2.2 percent, to $14.735 an ounce. The metal is up 14 percent this year.

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