Last week there was only one commodity to be in: gold or gold-related stocks.
Gold rose 4.4% last week and the US dollar fell 0.7%.
The greenback’s fall was partly reversed Friday by the market reaction to bog standard comments from Fed chairman, Ben Bernanke that the Fed will lift interest rates when it is convinced the economy is well enough to do so.
It is a standard set of comments he has been making now for months, as have other Fed members.
"My colleagues at the Federal Reserve and I believe that accommodative policies will likely be warranted for an extended period," Bernanke said.
"At some point, however, as economic recovery takes hold, we will need to tighten monetary policy to prevent the emergence of an inflation problem down the road."
Nothing new in that, but markets grab every comment and make of it what they want: at the moment they are a bit nervy about the rest of the year and fear the rally might be overbought.
It was enough to halt last week’s slide and the currency turned up from the 14 month low reached the day before.
Comex December gold fell $US7.70 to $US1,048.60 an ounce on Friday.
That was after it hit the all time high of $US1,062.70 an ounce on Thursday, the third record in as many days.
In London spot gold fell $US6.60 to $US1,048.50 an ounce and $US1045.60 in New York.
Traders said physical demand for gold remained weak with the high prices deterring jewellers.
Silver also fell from the 14-month high reached on Thursday.
December silver fell 12.5 cents to $17.69 an ounce in New York, after touching a 14-month high of $17.955.
Spot silver was at $17.70 an ounce against $17.72 Thursday.
Oil rose slightly Friday as a positive demand forecast for next year from the International Energy Agency outweighed the stronger greenback.
New York West Texas crude ended up 8 cents at $US71.77 a barrel. London Brent crude rose 23 cents to $US70.00 a barrel.
The IEA increased its global oil demand growth estimate for 2010 as well as for the rest of 2009.
That followed a similar move from the US Energy Information Administration earlier in the week which lifted its assumptions for next year.
World oil consumption will rebound next year as the global economy recovers from a deep slump, according to a report released Friday.
The US group said on Wednesday:
"Sustained economic growth in China and signs of a turnaround in other Asian countries continue to fuel expectations of a global recovery in world oil consumption.
"EIA has revised its expectations for world oil consumption upwards by 0.2 million barrels per day (bbl/d) for the remainder of 2009 and for 2010, in large part because of the revision to Asian growth.
"However, EIA has not revised its WTI oil price projections upward because ample oil supplies remain on the market.
"Oil inventories remain high and EIA expects oil production by the Organization of the Petroleum Exporting Countries (OPEC) to increase as well."
"Global oil consumption declined by 3.2 million bbl/d in the first half of 2009 compared with year-earlier levels.
"Members of the Organization for Economic Cooperation and Development (OECD) accounted for most of the decline, as non-OECD oil consumption was down by about 0.4 million bbl/d during that period.
"Preliminary data indicate that oil consumption in the third quarter of 2009 was 1.2 million bbl/d below year-earlier levels.
"EIA’s current macroeconomic outlook assumes that the world economy begins to recover at the end of 2009, led by non-OECD Asia.
"As a result, EIA expects world oil consumption to grow in the fourth quarter of 2009 compared with year-earlier levels, which would be the first such growth in five quarters.
"EIA projects world oil consumption growth of 1.1 million bbl/d in 2010, with almost all of the growth occurring in the non-OECD countries."
That tells us something extra about how the world economy will go next year: growth in economies like China, India and not in the US, Europe, UK or Japan.
It really won’t be a very sustainable recovery if that continues for all of 2010 and into 2011.
On Friday the International Energy Agency upgraded its forecasts a bit more than the US group.
It said it expects global oil demand to grow 1.7% in 2010 to an average 86.1 million barrels per day. That’s an increase of 350,000 barrels per day from its previous estimate.
The IEA said "buoyant economic activity in more oil intensive emerging countries" will help support demand next year.
However, the agency warned that next year’s economic outlook "is still fraught with uncertainty".
Global oil demand in 2009 is expected to average 84.6 million barrels per day.
That’s up 200,000 barrels per day from last month’s forecast. But overall consumption in 2009 is still expected to be down 1.9% from 2008’s level.
