Money and Metals

MarketWatch reports on currencies. "The dollar fell against the euro and yen Wednesday after a report showed nonmanufacturing sectors of the U.S. economy expanded at a slower pace in March, fueling concerns about the outlook for the U.S. economy."

"'The drop in U.S. services ISM to a four-year low is offsetting any upside reaction from Iran's decision to free the 15 British sailors,' said Ashraf Laidi, chief foreign-exchange analyst at CMC Markets. 'The fact that the much touted services sector is now joining its manufacturing counterpart into slowdown mode raises questions about the prospects of a soft economic landing.'"

"Late in New York, the dollar was quoted at 118.68 yen, compared with 118.95 yen late Tuesday. The euro stood at $1.3369, compared with $1.3328. The British pound traded at $1.9754 vs. $1.9737. The dollar changed hands at 1.2196 Swiss francs, compared with 1.2222 francs."

"Also weighing on the dollar was an Automatic Data Processing employment survey showing U.S. private-sector nonfarm payrolls increased by about 106,000 in March. The ADP report 'suggests downside risk for the nonfarm-payrolls report,' said T. J. Marta, strategist at RBC Capital Markets."

"Elsewhere, the yen touched fresh five-week lows versus the dollar and euro on Wednesday before recovering as risk appetite was on the rise again amid easing tensions between the U.K. and Iran. See futures movers."

"Mitul Kotecha, foreign-exchange analyst at French bank Calyon, said as interest rates remain the dominant driver in the currencies market, 'there seems to be little that will dent this carry attraction over coming weeks, with market volatility remaining low and risk appetite high.'"

"Gold futures climbed Wednesday to close at a five-week high, underpinned by weakness in the dollar and physical demand, even as Iranian President Mahmoud Ahmadinejad triggered a decline in crude-oil prices by saying captured British sailors would be freed."

"Gold for June delivery rose $7.70 to close at $677.40 an ounce on the New York Mercantile Exchange. It climbed to $681 earlier, its strongest intraday level since March 1."

"'The current rise in the gold price is overdue, but overhead resistance got in the way,' said Julian Phillips, an analyst at GoldForecaster.com. 'It is now out of the way so the jump is happening now."

"'This is caused not solely by the situation in Iran but a combination of factors,' he said. 'The factors include the fall in the dollar and expectations for more declines, oil prices holding above $60 a barrel, strong physical demand for gold at just under $660 and overall 'global uncertainty,' especially in the Middle East, he said."

"Indeed, 'there has been an aggressive shorting campaign to keep gold below $666,' said Peter Grandich, editor of the Grandich Letter. But 'like all previous capping exercises, this one is failing also thanks to an incredibly strong physical market.'"

"Neal Ryan, director of economic research at Blanchard said 'it's the physical supply side of the market in London that's been influencing prices so much the last few weeks.'"

"'Gold sales have been swamping the market the last three weeks...and the price has held up considerably well and even increased under that pressure,' he said. 'I think what we've seen today is the end of that selling pressure.' So, 'we're going to see prices jump up and challenge the May '06 high in 2-3 weeks in my opinion,' he said."

"Other metals prices climbed along with gold, though palladium was a lone loser, with its June contract closing down $1.60 at $354.15 an ounce. May silver rose 19 cents to end at $13.62 an ounce and July platinum rose $6.60 to close at $1,258.90 an ounce."