DARTLINE INVESTOR

November 20, 2009, 4:05 pm … Closing Thoughts … The Standard & Poor’s 500 index closed down 3.52 to 1091.38, as rates on some T-bills maturing in January were flat to slightly negative Friday. The three-month rate remained positive, at 0.015% at last check, which suggests more money available to buy stocks and commodities – Essentially paying the government to keep their money safe is a fool’s game. Treasurys were lower, with the two-year note down 1/32 to yield 0.711%, and the 10-year note off 1/16 to yield 3.347%. … The ICE Futures US dollar index, which measures the dollar against other major currencies, rose 0.5 percent. The stronger dollar can hurt commodities prices and also sales of U.S. exporters, whose goods become more expensive overseas when the dollar rises. … Energy companies logged some of the biggest drops as crude oil fell 74 cents to settle at $76.72 per barrel on the New York Mercantile Exchange as the dollar rose. Gold rose. … Reuters reports gold demand fell 34% in the third quarter as high prices weighed on investment flows and led to a slump in jewelry buying in key markets like India and the Middle East, a World Gold Council report showed. But speculation in gold futures and expectations for more official sector bullion buying are keeping prices elevated despite a dearth of physical demand, according to the WGC’s investment research manager Rozanna Wozniak. “For most of last year, the buying was very physical,” said Wozniak. “(Now), it seems to be more financial market-driven, by some of those other less visible instruments — derivatives, futures, over-the-counter transactions.” “In terms of why it is happening, we have had some good news coming out from the central bank sector, as well as the fall in the U.S. dollar,” she said. “That says something about potential future demand.” A 200-tonne gold purchase by India’s central bank pushed gold prices sharply higher in early November. But high prices have pressured physical offtake this year as consumers shied away from the metal, even as large investors and central banks bought gold as a portfolio diversifier. Indian jewelry demand tumbled 42% to 111.6 tonnes in the third quarter from a year earlier, though it inched up from extremely low levels earlier in the year. In the Middle East, jewelry buying was down 34 percent at 69 tonnes. Greater China, however — which comprises China, Hong Kong and Taiwan — saw a 10% rise in overall demand to 128.6 tonnes, while jewelry demand rose 7%.