Gold Futures Hit New Record Highs

U.S. 10-year Treasury bonds fell today after two days of rallying that saw fresh 3-year record highs. Bonds have rallied in the past months on growing concerns for the U.S. economy, with traders speculating that the housing and credit problem could derail the U.S. economy and send the country into a recession. Many traders are betting that a recession is already underway. Bonds typically rally on weakness and fall on strength, so despite today's slight drop, traders have positioned themselves defensively heading into the new year.

The majors were mixed today after weak housing numbers were released in the U.S. Despite equity weakness, the yen fell against the dollar and the euro. The carry trade has been the driving motivator for yen movement in the last months. Traders have been buying yen on equity weakness, and selling yen on equity strength. Today, equity weakness did not play a part in yen movement. The euro was up slightly versus the dollar, and is trading just off recent all-time record highs.

Crude oil rallied over 2% today, on general sentiment that yesterday's losses were overblown. Traders bought oil today on concerns that global demand will outpace supply in 2008, which has been the main motivator of crude's current rally. Last week crude hit $100 a barrel before falling back. Natural gas was up moderately today.

Gold rallied to new all-time highs, gaining over 2% on widespread safety buying. Gold normally trades inversely to the dollar and with crude oil. Today, traders focused on rising oil prices, and bought gold as a safety. The dollar was mixed today, and had less of an impact on gold prices than oil.

The major indexes recorded heavy losses today, after a rosy opening. Countrywide Financial led the downside, as traders laid heavy bets on bankruptcy rumors. Click here to read the rest of today's Stock Market Recap.