Gold jumps to a new record high to as much as $1045 after breaching the peak of $1033.9 made in March 2008.
- Demand for the 'yellow metal' came amid U.S. dollar weakness and renewed inflation fears, making gold an attractive alternative investment, especially after the G7 failed to voice a unified support for a stronger dollar over the weekend.
- The dollar dropped against most major currencies amid fresh doubts about its status as the world's reserve currency. The greenback was negatively affected by several reports hit the newswires yesterday stating that the Gulf state oil producers, together with China and Russia, have held talks aimed at replacing the dollar as the currency for pricing oil.
- The reports proposed to adopt a basket of currencies including gold to set oil prices in order to reduce volatility and depreciation associated with the dollar. These reports have been denied by Saudi Arabia and Russia. However, just the question of a pricing change had an immediate negative impact on the U.S. dollar and the currency failed to rebound.
- Manufacturing output fell by 1.9% in August against popular expectation of a rise of up to 0.4%. The overall production output fared even worse, declining by 2.5% to its lowest level since 1987! Britain's economic recovery is in question and this may force the Bank of England to maintain its rates at current levels of 0.5%.
- Today marks the traditional start to earnings season when Alcoa reports third-quarter results after the opening bell. The second quarter results came in better than expected, but much of the growth came as of cost-cutting from layoffs and compensation reductions. Alcoa shares rallied 3.5% Tuesday in a strong session for US equities.
Currency to watch out for: EURUSD & Crude Oil
- The EURUSD pivot point is at 1.4670 with a preference to enter into long positions at 1.4680
- Crude Oil pivot point is at 70.25 with a preference to enter into long positions at 70.75
Today's calendar and market movers:
- EU Final GDP expected to read at -0.1%
- German Industrial Orders expected to drop to 1.2%
- US Crude Oil Inventories expected to add 2 million barrels
- US stocks rose on Tuesday with the Dow up 1.37%, the S&P up 1.37% and the NASDAQ up 1.71%.
- As of 06:15 GMT the Nikkei is trading at 1.11% and the Hang Seng at 1.86%.