FYI | Sep 18 2006
By Greg Peel
A 33 point rally in the Dow on Friday to 11,561 was driven by further relaxation in inflation fears and further evidence that the Fed is unlikely to raise on Wednesday.
The CPI figure for August showed a 0.2% rise – half of that of the previous month. The core CPI (excluding food and energy) also rose 0.2%, which was equivalent to the July figure.
This was good news for those hoping the Fed won’t raise, but the “damned if you do, damned if you don’t” theme was maintained when one Fed official stated later in the day that lower fuel prices may restimulate consumer spending and economic growth. His statement affected a return to nervousness once more.
Sustained lower oil prices are continuing to influence gold price weakness. We are still in limbo as traders await the deadline for European central bank sales (Sunday) and the return of jewellery buying. India is about to complete the traditional Hindu period of mourning – one in which it is considered poor taste to be buying gold. It will be interesting to see what happens, as the rhetoric from various sources suggests there’s a bit of finger-crossing going on.
On the base metal front things were quiet but for nickel, which was once again trashed down 6%.