Citigroup's Rescue Fills Auto Void

By Ashraf Laidi
24 November 2008 @ 09:51 am EDT

The dollar and yen are the biggest casualties of the government's latest rescue package to a struggling US bank, this time in the form of guarantees up to $306 bln of Citigroup's assets, as well as injecting extra $20 bln from the TARP package. Improved risk appetite is further highlighted by gold's surge to a fresh 6-week high of $822 per oz, gaining over $80 since Friday. We continue to favor gold over oil as global demand destruction takes a toll on energy prices and precious metals benefit from central banks' liquefying of the financial system. News of Citigroup's rescue along with reports of a stimulus package form the President-elect Obama in the tune of $175 bln will provide an important counter to today's potentially negative report on US October existing home sales.

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