Spending, GDP, Inflation with all these data released yesterday, giving us some optimistic view of what coming in the United States, people are spending, showing that confidence might rise slightly, if you look directly on the data and discarding everything investors' believed that they are positive, but if you look at the overall picture the data would give a serious negative signs; growth holding at 0.6% in the fourth quarter of 2007, with no revision that could give some hope to all investor's in the markets, with inflation and spending rising with a hold in growth this takes us to a whole new status, not recession but worse than that stagflation. If the US economy officially falls into stagflation this would be their eternal agony, as they won't really know what to do with their bricks falling one after another.
With the insignificant strength gained from investor's believing that the GDP reading is a good at the mean time, the shiny metal (as it shares an inversely proportional relationship wit the US dollar) got pressured to trade narrowly yesterday, recording a high of $954.70 per ounce and closing at $950.47 per ounce, not changing from Wednesday recorded levels. While today, the gold ingots opened at $950.57 per ounce, dropping at the early Asian session to trade at $943.57.
On the other hand the black metals yesterday faced some decrease in supply due to a pipeline blown up in Iraq, which holds on the third place of the largest oil reserve between all exporting countries, the destructed pipeline would decrease the supply until it's fixed; when the news got released in the markets fear of dropping supply pushed oil prices to rise higher above $107 per barrel, while it's trading now around $106.86. Yet those levels were not that high according to the levels that it recorded in the past week, so we can notice that the strength the US dollar got from the investor's beliefs pressured the shiny metal and the oil.
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