Money and Metals

Reuters reports on the US dollar. "The dollar fell to a three-month low on Friday, hurt by concerns that crisis in the U.S. subprime mortgage market could curb growth in the world's biggest economy. The U.S. currency pared some losses after factory output exceeded expectations."

"Late on Friday, the euro traded up 0.6 percent against the dollar at $1.3311. Against the yen, the dollar traded down 0.6 percent at 116.74 yen."

"Sentiment on the greenback, which fell broadly, had soured overnight, with investors suspecting the crisis in the U.S. market for subprime mortgages, extended to borrowers with risky credit, could seep into other markets and parts of the economy, particularly after former Federal Reserve chief Alan Greenspan warned of such a risk on Thursday."

From MarketWatch. "Gold futures climbed Friday to close at their highest level in more than a week, boosted by a weaker U.S. dollar and uncertainty surrounding the outlook of the U.S. economy."

"'With stable equity markets, gold is able to concentrate on the declining dollar spurred by inflationary data,' said Peter Spina, a chief investment strategist at GoldSeek.com."

"And 'despite a truckload of new gold bears and many gold bulls openly licking their wounds, gold has once again shown its internal strength by consolidating its overbought condition and now resuming its climb to $700+,' said Peter Grandich, editor of the Grandich Letter."

"Gold for April delivery rose $6.80 to close at $653.90 an ounce on the New York Mercantile Exchange. It climbed as high as $656.50 earlier, a level not seen since last Friday, though it hasn't closed at a level this high since March 8. Gold's benchmark contract finished $1.90 above the week-ago closing level."

"'Gold finds itself once again pushing the $655-$660 resistance,' said Spina. 'A break above should bring in additional momentum and extend its rally.'"

"But 'with the subprime debacle resonating in the background, the threat of another market sell-off does remain a concern for the metals, which have become vulnerable on such strong selling pressures -- a rush for liquidity,' he said. For now, 'stable equity markets do allow gold to return its focus on the fundamentals and we see this today with the U.S. dollar back testing important technical support levels,' he said."

"'The terminally ill U.S. dollar and the mounting economic and political woes in the U.S. are only added reasons to expect $700 faster than most could imagine,' said Grandich."

"And 'it is encouraging to see gold reacting once again to a decline in the U.S. currency,' said Jon Nadler, an analyst at Kitco Bullion Dealers. 'Whether such a reaction becomes as reliable as it previously was remains to be seen.'"