William Dudley, President of the Federal Reserve Bank of New York said today that further Fed easing is needed if the economy does not improve. That was the trigger for gold and oil, which moved higher. Gold set a new record with the spot price at $1,317.10 in London. The December futures contract is trading at $1,317.10, up $8.20, Reuters reported.
The remark about the possibility of the Fed easing also triggered a sharp drop in the U.S. dollar. December futures are trading at 78.51, down 0.428. In a knee-jerk reaction, November oil spiked to $81.24 per barrel, up $1.27.
October is following through from the Septembers pattern. The game plan is to hit the dollar hard, to cause a rally in commodities and the stock market. It looks like traders want to keep the stock market up at all costs.
What this means, however, is higher inflation. With oil prices powering higher, consumers will pay more at the pump. The jump in gold is telling us that paper currencies are losing followers.
This must be what the Fed wants, otherwise it would step in and support the dollar, just like Japan did when the yen got too strong. Apparently, the Fed is content to let the dollar slide. Dollar weakness also helps our exports.