Definetly red flags
Gold futures hit another record high Friday — breaking above $1,300 US an ounce as investors piled into the precious metal as a perceived safe haven.Gold prices have gained 18 per cent so far this year as investors flee paper currencies.
The December futures contract for bullion surged as high as $1,301.30 US an ounce in morning trading in New York. It had slipped back to 1,298.50 US by 11 a.m. ET.
Gold got a boost after France reported better-than-expected GDP figures, strengthening the euro and tamping down the U.S. dollar. Gold is priced in U.S. dollars, so a weaker American currency makes it cheaper for those outside the U.S. to buy gold.
It was the fourth day of record gold prices this week. Bullion prices, which have risen 18 per cent this year, have recorded gains for 10 straight years. That's the longest winning streak since 1920, Bloomberg reported.
Investors and speculators have been flocking to gold as an alternative to paper currencies amid growing worries about the health of the global economy.
"Gold has started to trade as another currency," Scotia Capital currency strategist Camilla Sutton told CBC News. "We've seen that noticeably in the last few weeks, but it's been an underlying theme all year."
Silver hit a new 30-year high on Friday. It was trading at $21.40 US an ounce — its highest level since the Hunt brothers of Texas tried to corner the silver market in 1980. At that time, silver prices hit $50 US an ounce.
Silver prices are up 27 per cent year-to-date, outperforming gold.
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Carney alert for signs of U.S. downturn
Last Updated: Friday, September 24, 2010 | 12:54 PM ET Comments53Recommend30.
Bank of Canada governor Mark Carney said Friday any decision by the U.S. Federal Reserve to increase the American money supply would not result in the two countries' monetary policies heading in opposite directions.
Interviewed on New York-based CNBC, Carney said the same changes in the economic outlook that would lead to moves by the American central bank would also prompt the Bank of Canada to change from its recent course of raising interest rates.
Bank of Canada governor Mark Carney, shown in July, says the bank is ready to ease monetary policy if the economic outlook deteriorates. (Sean Kilpatrick/Canadian Press)
Carney said if the economy weakens, "then we'll deal with the direct consequences."
"Obviously, we'll adjust monetary policy to Canadian circumstances. There are limits to the divergence that there can be between Canada and the U.S."
The Federal Reserve said Tuesday it would continue to monitor the economic outlook and "is prepared to provide additional accommodation if needed to support the economic recovery."
That was widely seen as a sign the Fed is prepared to expand the use of its $2.3-trillion balance sheet to more aggressively buy U.S. treasury bonds in a move to push interest rates lower to encourage bank lending to business and consumer spending.
Carney said recent signs of American economic weakness are of "some concern" to Canada, given that 85 per cent of this country's exports go to the U.S., and the extent to which both the housing and auto industries in both countries are tied to each other.
Corrections and Clarifications
•An earlier version of this story had the headline "Bank of Canada ready to match U.S. Fed." To clarify, Bank of Canada governor Mark Carney did not say the central bank would match U.S. monetary policy but said there were limits to how far the two countries' policies would diverge.
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