BALTIMORE, MD-The Canadian dollar topped of at $1.0577 today, it's highest level since March 28, 1960 as commodity prices surged after the Fed cut key interest rates by a quarter-point despite a report by the Commerce Department that showed the US economy growing at a brisk 3.9%, the fastest pace in a year and a half.

Fed Cut and the USD
Confronted with climbing crude prices and a slumping housing market, the Fed decided to cut the federal funds rate today by a quarter-point lowering it to 4.5%.

Meanwhile, the USD index-a trade-weighted index that averages exchange rates between the US Dollar and six major world currencies-fell to it's lowest levels ever to 76.47.

Crude Oil
December oil futures surged this afternoon to a new record of $94.00/barrel today after the government reported sharp and unexpected drop in crude inventories for the second week in a row.

In its weekly inventory report, the Energy Department's Energy Information Administration said inventories fell by 3.9 million barrels last week. Last week's 5.3-million barrel decline sparked a 10% price rally. It could still take several days for the full impact of this week's report to be felt. So it's likely that we'll see continued strength in the oil markets.

Oil prices have also been on the rise as rumbling tensions in the Middle East are causing concerns of export disruptions.

Last week a sharp escalation in violence between Turkish and Kurdish rebels brought Turkey to the brink of sending troops south across the border into Iraq. Continued violence on the region will, of course, put further upward pressure on oil prices.

Gold
Gold rallied to a new 28-year high this afternoon topping off at $800.80/ounce as oil surged to a record peak and the USD fell.

Geopolitical tension in the Middle East as well as fears over a USD crash have lifted gold's appeal as a safe-haven asset, with speculators and investors betting on a rising market.

Profit-taking always remains a risk for the gold market at $800. However, most analysts on the street expected a significant profit-taking correction at $720 and $750 and again $780. But we haven't really seen any sharp correction so far. I don't think $850/ounce is out of the question in the mid-term.

The Loonie
With the continuing slide of the USD and constant record-breaking days for energy and metals, I expect the

Canadian dollar to continue higher.

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Until next time,

Luke Burgess
Gold World