The U.S. dollar rose marginally on Wednesday to hit its highest levels since late October against a basket of major currencies as the euro extended its losses over worries about euro zone sovereign debt.

The dollar’s strength boosted exporters in Japan, helping to push the Nikkei average up to a four-month high, while gold and silver inched up again after pulling back from record highs reached on Tuesday.

The dollar gained as U.S. Treasury bond yields rose, with the impact of the currency move felt across asset classes. The dollar index rose as high as 77.869, a level it last touched in late October.

“We’ve failed to notice that there is an improved tone to U.S. data and that is manifesting itself in a bounce in the U.S. dollar and it is manifesting itself in a bounce in U.S. Treasury yields,” said Robert Rennie, chief currency strategist at Westpac Bank in Sydney. “That is a process that can go a bit further. It’s quite a potent force in the short term,” he said. [Read more...]

Today, this proverb rings truer than it has in decades with the price of gold having traversed a vast distance virtually uninterrupted amidst global economic uncertainties. The price of gold is now at a record high ($1,350/oz), and in dollar terms it is up by 22.9% so far this year. If it ends the year on a positive note, it will be the tenth straight year of gains and the longest bull market for gold since 1920. This would also translate into a CAGR of 17.84%, since the beginning of this decade.

This upward move, however, has prompted a lot of talk about taking profits with the expectation of a significant decline in the near future. While we have been positive on gold for some time now, those claiming that the bull market in the commodity is ready to top out have some justifiable arguments. [Read more...]