GOLD RALLY “TO EXTEND INTO 2011”

Gold is up on the New York Spot Market as the U.S. dollar slumps and bargain hunters pick up the yellow metal after recent price consolidation. “Gold is trading off the dollar,” said Frank Lesh, a trader at FuturePath Trading LLC in Chicago. “The dollar’s getting whacked pretty good, and that’s helping gold.” (Bloomberg, 7/29/10)

Stocks are selling off on the New York Stock Exchange. Upbeat earnings data and a drop in weekly jobless claims had initially pushed stocks higher in early trading, but that mood soon turned negative led by big tech issues such as IBM and Intel and consumer names such as Kraft Foods and Procter & Gamble. (CNN Money, 7/29/10)

Joachim Fels, the co-head of economics at Morgan Stanley says the Fed’s fiscal policies should be the primary concern for investors at this stage over worries of a double-dip recession. Fels said he believes the Fed needs to end its very loose monetary stance sooner rather than later, as it will push up inflationary pressures across the world, given many emerging nations are importing US monetary policy in a bid keep their exports to America competitive. "Inflation is rising," he said. "In India we are seeing signs of rising prices and inflation is now the major risk.” According to Fels, "Monetary policy will face an awkward choice between allowing inflation to run its course and raising interest rates aggressively despite high debt levels. Our suspicion is, as we have explained in the past, that they would opt for the former – allow higher inflation for some time in order to help reduce the debt burden." (CNBC, 7/29/10)