How could the Pakistani political crisis impact the U.S. economy and gold?
*Reuters, by Vivianne Rodrigues, December 27, 2007:
“Gold and government bond prices rose while U.S. stocks slid on
Thursday as news of the assassination of Pakistani opposition leader
Benazir Bhutto, combined with mostly weak U.S. economic data, increased
investors' demand for safe-haven assets.
Some analysts said the shock of the Bhutto news triggered a classic flight of capital to assets deemed as safe havens in times of geopolitical stress. Bhutto's death at a political rally in Rawalpindi could spark regional instability and civil unrest within Pakistan.
Gold rallied to a one-month high, up $6.35, or about 0.7 percent, at $830.65 an ounce.
The benchmark 10-year U.S. Treasury note shot up 14/32 in price, with its yield at 4.23 percent, down from 4.28 percent late on Wednesday. Euro-zone government bond prices also rose after the Bhutto news and a stream of U.S. data, paring earlier losses to standing slightly down on the day.
U.S. crude oil futures soared above $97 a barrel after the latest government inventory data showed a steep drop in crude stockpiles, while stocks sold off sharply and the dollar sank against the euro.
New orders for U.S. durable goods, which are long-lasting U.S.-made manufactured goods such as cars, refrigerators and washing machines, rose by a much less-than-expected 0.1 percent during November.
In contrast, an index of U.S. consumer confidence unexpectedly rose in December, and as a result, U.S. Treasury bonds pared some gains from the morning's highs.”
*This information is solely a highlight of the opinion of a third-party publication and is incomplete. Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.
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