Gold May Break Out to Record, Grabham Says: Technical Analysis

Gold may advance to a record $1,325 an ounce if it first breaks out of a symmetrical, triangular pattern, a move that may occur in the next one or two weeks, Standard Bank Group Ltd. said, citing trading patterns.

A so-called topside breakout would be indicated by a close at more than $980.85 an ounce, Darran Grabham, the bank’s technical analyst, wrote in a note yesterday. That would signal a short-term bull trend to at least $1,100 an ounce, he said. Gold traded today at $952.80.

In addition to the triangular pattern, gold rising to more than this year’s peak of $1,006.29 would “confirm the completion of a continuation head-and-shoulders pattern -- the eventual target is $1,325,” Grabham wrote. The precious metal’s record stands at $1,032.70, touched on March 17, 2008. (more)

Shiller: Why the Rally? Good Feelings

The rise in global economic confidence might seem strange, given the financial problems that remain and new ones apparently on the horizon.

But Yale University economist Robert Shiller says something called a �positive feedback loop� explains the improved sentiment.

�Economic analysts often turn to indicators like employment, housing starts or retail sales as causes of a recovery, when in fact they are merely symptoms,� Shiller writes in The New York Times. (more)

China Tightens Grip on Rare Minerals

China is set to tighten its hammerlock on the market for some of the world’s most obscure but valuable minerals.

China currently accounts for 93 percent of production of so-called rare earth elements — and more than 99 percent of the output for two of these elements, vital for a wide range of green energy technologies and military applications like missiles.

Deng Xiaoping once observed that the Mideast had oil, but China had rare earth elements. As the Organization of the Petroleum Exporting Countries has done with oil, China is now starting to flex its muscle. (more)

As hybrid cars gobble rare metals, shortage looms

The Prius hybrid automobile is popular for its fuel efficiency, but its electric motor and battery guzzle rare earth metals, a little-known class of elements found in a wide range of gadgets and consumer goods.

That makes Toyota's market-leading gasoline-electric hybrid car and other similar vehicles vulnerable to a supply crunch predicted by experts as China, the world's dominant rare earths producer, limits exports while global demand swells.

Worldwide demand for rare earths, covering 15 entries on the periodic table of elements, is expected to exceed supply by some 40,000 tonnes annually in several years unless major new production sources are developed. One promising U.S. source is a rare earths mine slated to reopen in California by 2012. (more)

Beijing's derivative default stance rattles banks

A report that Chinese state-owned companies will be allowed to walk away from loss-making commodity derivative trades provoked anger and dismay among investment bankers on Monday as they feared it may set a damaging precedent.

The State-owned Assets Supervision and Administration Commission, the regulator and nominal shareholder for state-owned enterprises (SOEs), told six foreign banks that SOEs reserved the right to default on contracts, Caijing magazine quoted an unnamed industry source as saying in an article published on Saturday.

While the details of the report could not be confirmed, it was Monday's hot topic in financial circles from Shanghai to Singapore as commodity marketers feared that companies holding underwater price hedges could simply renege on the deals, costing banks millions of dollars in profit. (more)

US Stocks Close Lower In Fincls Led, Broad Slide

Nearly every component was a dog of the Dow on Tuesday, as Bank of America, American Express and JPMorgan paced a broad-market, financials-led pullback that pushed 29 of the Dow Jones Industrial Average's 30 components into the red.

After ticking slightly higher following a report that the Institute for Supply Management's monthly manufacturing index marked its highest reading since June 2007, stocks sold off for the rest of the session. Banks were at the forefront of the declines after pacing the market higher for much of August, especially in the last week. (more)

Oil rules may kill price

A debate is emerging over how curbs on energy market speculation may affect oil prices, with at least one major bank boldly expecting the new rules will trigger a 30% price plunge.

The outcome holds wide-ranging implications for G20 developed nations that are collectively spending as much as US$4.8-trillion to stimulate their economies through the worst global recession in decades.

"Regulators don't and shouldn't talk about trying to influence prices," said John Brodman, a former deputy assistant secretary at the U.S. Department of Energy. "But there's a growing political imperative out there. An oil price rise of US$30 a barrel would offset 40% of the stimulus spending. That's not what these countries are looking for." (more)