Money and Metals

MarketWatch reports on precious metals. "Gold futures closed almost $8 an ounce higher Thursday as news that the U.S. economy slowed to a crawl in the first quarter helped boost investment demand for the precious metal. But prices still suffered a monthly loss of more than 3% with the U.S. dollar trading higher for the month of May on lower odds of a rate cut in the U.S."

"'Gold's start and end to May is quite the contrast,' said Peter Spina, an analyst at GoldSeek.com. 'The market entered the month of May with gold seeing the last of its upwards momentum run, unable to push past the $700 barrier,' he said. 'A major culprit to this was an aggressive amount of central bank selling oversupplying the market in a short period resulting in the current consolidation pattern.'"

"Gold for June delivery closed up $7.90 at $661 an ounce on the New York Mercantile Exchange after climbing as high as $662. June gold ended the week with a loss of nearly $22.50 after finishing the month of April at $683.50."

"'Despite an onslaught of bearish forecasts, gold has more than held its own,' said Peter Grandich, editor of the Grandich Letter. 'This has caused some of the shorts to grow nervous. We could see panic covering on a move above $665' in gold, said Grandich."

"The market is approaching a season that is typically 'the lull in investment demand for precious metals on an annual basis,' said Neal Ryan, director of economic research at Blanchard. But this summer could 'potentially be quite a different seasonal experience than those of years past,' he said."

"'We have the labor strikes, more than likely a slowdown of the increased central bank sales of late, and the market is out of favor at the same time the U.S. economy is showing some serious fatigue and the rest of the globe is continuing to grow,' he said."

"Other metals reflected gold's strength Thursday. The July silver contract closed at $13.47 an ounce, up 1.9%, or 25 cents, but down 0.8% from a month ago. September palladium added $1.50 to end at $373.25 an ounce, down more than $6 for the month, while July platinum tacked on $21.80, or 1.7%, to close at $1,285.80 an ounce, down almost $13 for the month."

From Reuters. "Europe's central banks are again likely to sell less gold this year than an agreed annual limit of 500 tonnes, despite a pick up in recent weeks, analysts say."

"The pace has risen in the recent past due to higher sales by Spain's central bank, but total selling during the current year, which ends in September, is estimated between 380 and 420 tonnes, against 396 tonnes last year and 497 tonnes in 2004-05."

"Total sales by all banks now stand at around 250 tonnes. The Austrian central bank said on Thursday it sold 14 tonnes of gold from its reserves in 2006."

"'Overall, CBGA sales are most unlikely to be maintained at this recent rate. However, we could end the agreement year a bit above 400 tonnes, rather than at or below the level,' Philip Klapwijk, chairman of metals consultancy GFMS Ltd, said."

The Street.com. "An increase in a key inflation measure had investors scrambling to buy hard assets and sent precious metals rallying Thursday in New York. Helping the metals was a report from the Commerce Department on the economy. The government said that gross domestic product grew at only a 0.6% annual pace in the first three months of the year, but the chain deflator, which measures prices of goods and services, jumped 4%, more than double the rate in the fourth quarter."

"'The Federal Reserve definitely has an inflation problem,' says T.J. Marta, a fixed-income strategist at RBC Capital Markets in New York."

"Indeed, the minutes of the last Fed meeting, released during the prior session, indicated that policymakers still have the threat of rising prices on their radar. Even though officials are closely monitoring the slowdown in housing, their primary concern appears to remains inflation."

"Elsewhere, there was more evidence of some investors losing their love for streetTracks Gold Shares, the largest gold exchange-traded fund. New figures show bullion holdings by the ETF dropped nine tons Wednesday to 464 tons. Gold Shares inventories, which are held in London vaults, reached their peak of 501 tons on April 17 before reversing over the past few weeks."

Marketwatch reports on the markets. "Gold futures closed lower Wednesday to log their first loss in three sessions as traders fretted about the potential for a slowdown in Chinese demand after that nation tripled taxes on stock trades. 'The story of the day was the growing danger of a serious potential reversal of fortune for the metals markets, coming out of their best customer of late: China,' said Jon Nadler, an analyst at Kitco Bullion Dealers."

"Chinese officials are 'dead-serious about curbing rampant speculative fever in that country's red-hot stock markets,' he said."

"Gold, silver or copper cannot ignore the China factor, he said. 'Previous assessments about the never-ending Chinese consumption party...must now yield to more sober analyses of just what the 'real' demand that can be expected out of that country will be.'"

"Gold for June delivery closed down $4.10 at $653.10 an ounce on the New York Mercantile Exchange. The contract had gained $3.90 during a two-session win."

"China's Shanghai Composite Index tumbled 6.5% on Wednesday after the government unexpectedly tripled duties charged on stock trades, the latest in a series of official steps taken to cool speculative activity and head off what many believe is a runaway equity-market bubble."

"Currencies trading provided little guidance for gold prices Wednesday. The dollar traded mixed against other major currencies in narrow ranges, showing little reaction to minutes from the Federal Reserve's latest interest-rate meeting, which offered few surprises."

"Crude-oil futures edged higher as traders awaited data on U.S. petroleum supplies due Thursday, one day later than usual because of Monday's Memorial Day holiday."

"There's a giant short position in the gold market that's hoping seasonal weakness, a consolidating U.S. dollar and no geopolitical concerns currently on the front page, can all help gold break below key support around $640, said Peter Grandich, editor of the Grandich Letter. 'It would be best to wait for a close above $665 before assuming the shorts have lost another battle,' he said."

"Silver prices spent most of the session trading lower, but recouped nearly all of their losses by the close. The July contract finished at $13.22 an ounce, down 0.3 cent, after gaining 22.3 cents in the previous session."

From Bloomberg. "The yen rose from a record low versus the euro after Chinese stocks slumped and investors sold emerging-market assets bought with money borrowed in Japan."

"Japan's currency advanced after China raised a tax on securities transactions to stem surging share prices. The yen has fallen 3.8 percent versus the euro this year as investors have been taking advantage of low borrowing costs in Japan to fund investment in higher-yielding assets elsewhere."

"The currency trimmed its gains as U.S. shares rose, easing concern that investors will flee global stocks. 'The yen has improved a bit on the back of the news from China,' said Christian Dupont, a senior currency trader at Societe Generale SA in Montreal. 'It will be short-lived. It isn't going to buck the trend of a lower yen.'"

"Japan's currency increased 0.1 percent to 163.45 per euro at 4:15 p.m. in New York, rising from a record low of 164.29 yesterday. It earlier reached as strong as 162.96 per euro in Asian session. The yen was little changed at 121.67 per dollar, after reaching 121.30 per dollar in Asian trading."

"The dollar strengthened against the euro as minutes from the Federal Reserve's May 9 meeting showed policy makers saw inflation as the 'predominant' concern for the economy."

"The Fed held borrowing costs at 5.25 percent at this month's meeting. The European Central Bank's benchmark is 3.75 percent and the Bank of Japan's key rate is 0.5 percent."

"The U.S. currency gained 0.1 percent to $1.3432, after earlier reaching $1.3407, the strongest since April 10. It has rebounded from a record low of $1.3681 set April 27."

"The Fed said in the minutes that inflation remains 'uncomfortably high,' and that the dollar's drop may 'reinforce the upward pressure on import prices.' They also pointed out the housing recession is likely to be a drag on the economy for longer than anticipated."

"The minutes are 'modestly dollar friendly,' said Alan Ruskin, head of currency strategy at RBS Greenwich Capital Markets. 'This is more evidence that the Fed is a long way away from supporting the easing story, that has faded fast, but is still priced in as a likely early 2008 event.'"

"Futures traders scaled back bets last week that the Fed will cut its overnight lending rate after reports showed consumer confidence gained and the housing market improved. Futures contracts show the chance of a cut in September has fallen to 12 percent, from 40 percent at the end of last month."

"The Taiwan dollar, also used to fund investments abroad, also advanced today as traders sold higher-yielding assets. Taiwan's dollar climbed against 12 of the 16 major currencies."

"China's benchmark CSI 300 Index of stocks tumbled 6.8 percent, the most in three months, after the Finance Ministry tripled the stamp duty on stock trading to 0.3 percent."

"A 9.2 percent slump in China's shares on Feb. 27 triggered a global stock rout, fueling a 2.3 percent gain in the yen against the dollar, the biggest increase since July 2005, as investors unwound so-called carry trades."

"The yen's gains were capped as U.S. stocks rebounded, erasing earlier losses. The Standard & Poor's 500 rose to a record. 'The decline in stocks triggered some correction in the yen carry trades,' said Dixon Fung, a currency trader at MG Financial Group. 'But the episode won't last long. The yen will remain weak until the Bank of Japan does something about interest rates.'"

"The yen has dropped against all 16 major currencies this year. It has fallen 2.1 percent versus the dollar, 6.5 percent against the Australian currency and 11 percent versus the Canadian currency."

"Euro declines may be limited after ECB council member Nicholas Garganas said the central bank will probably raise its inflation forecast next month and is keeping options ``open'' on rate increases after June."

"M3 money supply, which the ECB uses as a gauge of future inflation, rose 10.4 percent last month from a year earlier, after increasing 10.9 percent in March, the most since February 1983, the ECB said today."

"The Norwegian krone dropped against all 16 most actively traded currencies after the country's central bank signaled it will boost borrowing costs only gradually. The Norges Bank lifted the rate to 4.25 percent today."

The Associated Press reports on currencies. "The dollar narrowed earlier losses Tuesday after a U.S. survey showed an unexpected recovery in consumer confidence. The 13-nation euro rose to $1.3453 in late New York trading, up from $1.3447 late Friday. The euro traded as high as $1.3520 during Tuesday's session after European Central Bank board member Axel Weber was quoted as pointing to possible inflationary pressures in the euro zone."

"The dollar pared its losses against the euro after the New York-based Conference Board said its Consumer Confidence Index rose to 108.0 in May, up from a revised 106.3 in April. Analysts had expected the reading to fall to 104.5."

"But news on the housing sector was less positive, with the Standard & Poor's housing index indicating that U.S. home prices fell 1.4 percent in the first quarter compared to a year ago, the first time since 1991 that prices posted a quarterly drop."

"U.S. economic data are being watched closely for pointers to the Federal Reserve's future interest rate course."

From MarketWatch. "The yen briefly rallied after news that China raised its stamp tax on securities trading triggered some unwinding of carry trades. But gains in the yen later fizzled as investors believed the hike is unlikely to have a major impact on China's stock market and currencies."

"'The news out of China is especially striking against the government's series of [recent] attempts to tighten liquidity,' said Sophia Drossos, currency strategist at Morgan Stanley. 'While we believe that the announcement may cause a wobble in risk appetite, it is unlikely to significantly derail market trends, as seen in the quick recovery from the late February Chinese stock plunge,' she said."

"The dollar was quoted at 121.63 yen, compared with 121.69 yen. Most financial markets in the U.S. and Europe were closed Monday. The British pound stood at $1.9810 vs. $1.9843. The dollar changed hands at 1.2253 Swiss francs, compared with 1.2276 francs."

"The euro touched a fresh record high against the yen after Weber, ECB council member and president of the German Bundesbank, in an interview with the Financial Times, said the current cycle of interest rate hikes is not over. 'If necessary we also have to move into a territory that is portrayed as being restrictive if that is needed to control inflation,' Weber said."

From Bloomberg. "The Bank of Canada said for the first time in a year that it's ready to increase interest rates because inflation is accelerating faster than it expected."

"The central bank may raise rates 'in the near term' should inflation stay above its 2 percent target, policy makers said today in a statement from Ottawa. The Canadian dollar rose to the highest level in more than 30 years and government bond yields surged. The bank, which kept the benchmark rate at 4.25 percent today, next meets on July 10."

"'The Bank is sending a point-blank warning,' about raising interest rates, said Doug Porter, an economist with BMO Capital Markets in Toronto. He predicts two quarter-point moves at the next meetings, in July and September."

"Gold futures climbed Tuesday for a second-straight session but finished below the day's best level, finding support from some weakness in the U.S. dollar, but pressured by a steep drop in oil prices."

"Gold for June delivery closed up $1.90 at $657.20 an ounce on the New York Mercantile Exchange, retreating from an earlier high of $661.90. The contract climbed $2 on Friday, but still lost $6.70 last week."

"Overall, 'not since the secular bull market began more than five years ago has there been such a pronounced increase in bearishness towards gold without an accompanying decline,' said Peter Grandich, editor of the Grandich Letter."

"'Unless these bears can get gold below $640 fairly soon, they may see their shorts squeezed all the way up to and through $700,' he said."

"'Traders are looking at gold as a strong value buy since stocks are recovering, and with the strong housing numbers last week and with higher gasoline prices, it appears that inflation can still present a problem,' said John Person, president of NationalFutures.com. 'Therefore it is a great time to add long positions.'"

"Also, the June gold futures contact has a first notice day on Thursday, 'so last week we may have seen a long liquidation and now traders are re-entering the further out months,' he said. 'This is adding to support in the gold market.'"

"The gold market 'has withstood tremendous pressure in the last few weeks with investment buying turning to selling and central bank sales at high levels again,' said Peter Spina, an analyst at GoldSeek.com. 'The market has held up solidly above support in the lower $650s, but [has been] unable to get over $663,' he said.

"Meanwhile, Spina pointed out that there's news the $11.4 billion Swiss-based Novartis Pension Funds will invest 4% of the funds into precious metals."

"'Gold and silver have upside bias during this shortened weak with terrific support just below these current levels,' Spina said."

"Silver prices were the biggest gainers among the metals Tuesday, with the July contract gaining 22.3 cents to close at $13.223 an ounce. September palladium fell 50 cents to finish at $372.55 an ounce and July platinum gave back $13, or 1%, to end at $1,264.80 an ounce."

Reuters reports on the markets. "Gold ended higher in New York afternoon trade on Friday, bouncing back from the nine-week low set on Thursday, and analysts said the metal might recover on bargain hunting and physical buying. But larger-than-usual gold sales by European central banks in the past weeks might weigh on prices, they said."

"'At some stage, we would expect the downside to fade a little bit, giving some room for an upside swing. You start to feel now that there is some hesitation in the selling,' said Frederic Panizzutti, precious metals analyst at MKS Finance. 'We would expect gold to bounce back from around these levels. The dollar remains a key factor,' he said, adding physical buying was likely to be good."

"Gold was quoted at $655.35/655.85 an ounce by 3:02 p.m. EDT, against $653.20/653.70 in New York late on Thursday, when it fell as low as $651.30. Most-active gold for June delivery on the COMEX division of the New York Mercantile Exchange settled up $2.00 at $655.30 an ounce, trading between $653.30 and $656.90."

"'The fact that the speculative community is still holding relatively large long positions in gold adds an additional layer of downside risk if U.S. dollar strength continues,' Deutsche Bank said in a research note. 'We are maintaining our core bullish view on gold based on U.S. dollar strength fading and new record lows being hit during 2007.'"

"Traders said gold sales by European central banks under a five-year pact that started in late 2004 had dampened sentiment. On Tuesday, the European Central Bank said it sold 280 million euros of gold and gold receivables. Some analysts said the bank had accelerated sales recently to catch up with its slower sales pace early this year."

"In May, the Bank of Spain sold 1.3 million ounces of gold from its reserves, after it sold another 1.3 million ounces in March. In April, the Bank of France disclosed that it had sold 105 tonnes of gold in 2006."

"Silver rose 13 cents to $12.95/12.98 in New York compared with its last quote on Thursday in New York."

From MarketWatch. "Gold futures closed higher Friday as news reports that North Korea has test-fired several missiles boosted the metal's appeal as a safe-haven investment, but prices still closed out the week 1% lower after tumbling more than $9 an ounce in the previous session."

"'Once gold prices hit close to $650, that level is considered a bargain by many traders...especially if you see energy prices accelerating inflationary pressures,' said John Person, president of NationalFutures.com. 'The housing numbers are strong, the U.S. and global economy is still strong, so gold is considered a value play here, especially since it has traded close to $650 this week,' he said."

"Among the other metals trading in New York, platinum and palladium prices moved lower Friday. 'There is some jawboning in the market now from investment houses sponsoring ETFs on European bourses that a U.S. ETF in platinum or palladium will never happen,' said Neal Ryan, direct of economic research at Blanchard. But even without the advent of a U.S. platinum-group metals exchange-traded fund, the European PGM ETFs are 'starting to show that while small and slow so far, there is some appetite for investing in the PGM ETFs in Europe.'"

"'If these platinum and palladium ETFs can end up impacting even 3% to 5% of the demand side of the market, they will significantly influence the price, he said."

"July platinum closed down $12.90 at $1,277.80 an ounce. It lost 3.6% from a week ago. June palladium fell $1.30 to close at $367.80 an ounce, which was up 0.7% from the week-ago close."

The Associated Press reports on the markets. "Gold prices tumbled Thursday under pressure from a firming U.S. dollar, an expiring gold options contract and weaker crude oil prices. Meanwhile, June gold options expire Thursday, which means positions will either be abandoned or exercised, said George Gero of RBC Capital Markets Global Futures. 'That's why you have some pressure in today's prices,' he said."

"The June contract for gold shed $9.30 to settle at $653.30 an ounce on the New York Mercantile Exchange."

"A mixed assessment of U.S. economic data offered little support for the industrial metals market, which weakened further. New home sales surged 16.2 percent in April but the median price of a new home plummeted by more than 11 percent at the same time, according to a Commerce Department report. The agency also reported a 0.6 percent rise in U.S. durable good orders, but the increase came in shy of some analysts' expectations."

From MarketWatch. "'The dollar is the heaviest influence on the gold price at the moment, with the oil price not directly pressing down on the price,' said Julian Phillips, an analyst at GoldForecaster.com. 'We believe the gold price is being held back, not only by heavy and continuing sales from the European banks, but from the U.S. gold exchange-traded fund, StreetTracks, where over 30 [metric tons] of gold has been sold since the middle-of-April peak,' he said."

"'With gold sitting on support after the funds tried to take advantage of the technical weakness of the market today, all are watching to see if gold can recover again,' he said."

"'The bullion headed for the $650 mark as soon as the U.S. dollar received a fresh adrenaline shot from the durable goods and new-home sales reports, mid-morning,' said Jon Nadler, metals analyst at Kitco."

"KNadler said that the U.S. Mint has sold only 1/10 of the amount of bullion coins month-to-date, vs. one year ago. See the U.S. Mint data. 'Just try to tell us that such a dismal sales level is not a reflection of souring investor mood, low expectations, and fast-changing purchasing patterns,' he said."

"'Yes, we are oversold; yes, we are due for another corrective pop,' he said. 'But, boy, this market is looking quite a bit different now.'"

"Other metals prices also posted losses Thursday. July silver fell 1.4%, or 18.5 cents, to close at $12.92 an ounce, July platinum declined $16.30, or 1.3%, to end at $1,290.70 an ounce and June palladium fell $8.45 to finish at $369.10 an ounce."

From Bloomberg. "Gold fell to a two-month low in New York as a gain in the value of the dollar reduced demand for the precious metal as an alternative investment."

"Investment in the StreetTracks Gold Trust, an exchange-traded fund backed by bullion, has fallen 6.3 percent to 469 metric tons from a record on April 17. Before today, gold had gained 3.9 percent this year as the euro climbed 1.9 percent against the dollar."

"'Gold is precariously hanging on,' said Ron Goodis, futures trading director at Equidex Brokerage Group Inc. in Closter, New Jersey. 'The dollar is in reasonable condition. The fund managers aren't too eager to jump into this market.'"

"Stronger U.S. home sales may buoy speculation the Federal Reserve will raise interest rates this year. The Fed has kept its benchmark rate unchanged at 5.25 percent since June while the European Central Bank has raised rates three times since August to 3.75 percent."

"'With rates potentially moving higher, that can be a problem for metals across the board,' said Goodis of Equidex."

"Gold reached a 26-year high of $732 on May 12, 2006. The metal's failure to climb above last year's highs as the euro hit a record sparked selling from hedge funds, analysts said. Five of the past six bear markets for the U.S. currency have led to a higher gold price."

"'Gold seems to be struggling and the technical picture has weakened in the past couple of weeks,' said William O'Neill, a partner at Logic Advisors. 'A lack of alternative asset demand for gold has been a negative.'"

Reuters reports on currencies. "The dollar fell on Wednesday after minutes from a Bank of England policy meeting and strong data on euro zone industrial orders suggested interest rates in Europe could rise more than previously thought. The pound surged against the dollar after the BoE minutes showed that, contrary to expectations, the central bank's decision to raise rates this month was unanimous, and some members even had considered a half percentage point rise."

"'There's been a complete readjustment of interest rate expectations that caught everyone flat-footed, and now you're starting to see some short covering and the dollar strength that we've seen getting reversed,' said Boris Schlossberg, senior currency strategist at DailyFX.com."

"By late afternoon, the euro was trading at $1.3458, up 0.1 percent but off an earlier session high of $1.3502. Sterling was up nearly 0.6 percent at $1.9857, having rallied more than 1 cent after the release of the minutes."

"Elsewhere, the Canadian dollar hit a 29-1/2-year high of 1.0817 to the U.S. dollar, extending a rally driven by rising oil prices and a bidding war by foreign suitors for Canadian companies in the natural resources sector."

"But the dollar still faces a rough road ahead, said Alex Beuzelin, market analyst at Ruesch International in Washington. 'While the market has ratcheted back expectations of U.S. rate cuts, the euro zone and UK numbers today suggest higher rates there, and that's a prescription for renewed dollar weakness,' he said."

The Associated Press. "Gold and silver futures rose in light trading conditions Wednesday, boosted by a softer U.S. dollar. June gold settled up $2.70 at $662.60 a troy ounce on the New York Mercantile Exchange. July silver settled up 11.5 cents at $13.105."

"'You have the dollar coming back down, which is supporting the precious metals,' said Michael Gross, broker and futures analyst with Liberty Trading."

"July platinum settled up $8.30 at $1,307 an ounce. June palladium settled down $1 at $377.55."

From MarketWatch. "'Although far from being out of the woods, gold enjoyed a more constructive mid-week session as light buying emerged on the back of a marginally declining U.S. dollar against the euro,' said Jon Nadler, metals analyst at Kitco Bullion Dealers."

From Bloomberg. "Former Federal Reserve Chairman Alan Greenspan said he was concerned Chinese stocks might undergo a 'dramatic contraction' after its main stock index jumped more than 90 percent this year."

"The benchmark CSI 300 Index, which tracks yuan-denominated A shares listed on China's two exchanges, rose to a record 3938.95 today. The index more than doubled last year as investors bet corporate profits would be boosted by the world's fastest-growing major economy."

"'It is clearly unsustainable,' Greenspan told a conference in Madrid today by satellite. 'There is going to be a dramatic contraction at some point.'"

"China last week increased the amount it lets the yuan move against the dollar and raised interest rates to restrain economic growth and a swelling trade surplus. U.S. lawmakers said the steps weren't enough to forestall legislation to punish China for maintaining what many charge is an artificially cheap yuan to stoke exports."

"Greenspan today said the global financial system remains resilient. 'I am not worried about the system overall, but I am worried about some parts,' he said. 'I am concerned for example about China.'"

From CNN Money. "Cheap debt has never flowed as freely as it does now, but the credit boom won't last forever, experts say. 'The numbers have gotten so big and there is such a lack of recognition of risk. Whenever you go this far, things tend to turn out very badly,' said David Tice, manager of the Prudent Bear funds."

"Defaults are likely to mount quickly if a notable company unexpectedly collapses, says Sean Egan, managing director of independent ratings firm Egan-Jones. 'It has to be a major company, it could be an auto company that has difficulty with cash flow - in order for it to really be a drag on the market,' he said."

"While the economy has slowed, fundamentals still remain strong, said Eric Takaha, director of high-yield research and portfolio manager for Franklin Advisers. 'We don't see a dramatic surge in defaults in the near future; there just aren't enough companies that are close to the edge,' he said."

"Hedge funds have become important lenders in the booming market for leveraged loans, those loans given to highly-indebted companies. Leveraged loans have ballooned amid the buyout frenzy and keep growing. Leveraged loan volume surged to $183 billion in the first quarter, up 55 percent from the same period a year ago, according to Standard & Poor's."

"But many of these hedge fund lenders haven't experienced the ups and downs of the credit cycle, and it's unclear how they will react when market conditions take a turn for the worse, industry watchers said."

The Associated Press reports on currencies. "The euro slid against the U.S. dollar in trading Monday, but rose to a new high against the Japanese yen on moves by China. The 13-nation euro bought US$1.3440 in afternoon trading, down from the US$1.3505 it bought in New York trading late Friday."

"Against the yen, the euro rose after the Japanese currency was ignored by a weekend meeting of finance officials with the Group of Eight near Potsdam, Germany. The yen's fall came after China on Friday agreed to let its yuan rise faster against the dollar and to cool its sizzling economy ahead of what are expected to be contentious talks in Washington over Beijing's soaring trade surplus."

"The free-floating yen sometimes acts as a proxy to the tightly managed yuan on currency markets. The U.S. dollar bought 121.54 yen, compared with 121.15 yen late Friday."

"The Chinese central bank cautioned that the latest change, widening the band in which the yuan is allowed to fluctuate against the dollar, will not lead to "large appreciations" for the yuan."

From Reuters. "'The dollar is doing well against the euro and yen and (is helped by) the Goldilocks scenario in the U.S., where's there's not too much worry about a hard landing,' said David Powell, currency strategist at IDEAglobal in New York."

"'In terms of the dollar's performance against the euro, long euro/dollar has been a very crowded trade based on the specs (trading) data last week. Euro longs hit another record high and people are reluctant to bring it any higher without a fundamental story to back it up,' he added."

"Following China's move, Kuwait over the weekend switched to a basket system from a dollar peg. Analysts said the pressure for managed currencies to move toward a floating regime will only intensify."

"'It will do so because countries can't cope with the liquidity created by fixed currency systems when the dollar is weak and it will also do so because there is political pressure from G7, particularly the U.S.,' said Bear Stearns in a research note."

From MarketWatch. "Gold futures climbed Monday, overcoming strength in the U.S. dollar to follow oil prices higher and regain some lost ground, after a more than $10-an-ounce loss last week. 'After the declines last week, we expected some bounces,' said Jon Nadler, an analyst at Kitco Bullion Dealers. The climb is 'probably good for $665 or so at the least.'"

"'It may take a handful of closing at levels of well over $665 to turn this ship around for sunnier climes and somewhat warmer waters,' he said. 'The bearish tone is not over.'"

"Gold for June delivery closed up $1.80 at $663.70 an ounce on the New York Mercantile Exchange, bouncing from a low of $657.50. Other metals prices closed higher, with the exception of platinum, which saw its July contract give back $6.50 to close at $1,319.70 an ounce, extending last week's loss of more than $15."

"June palladium tacked on $9.05 to end at $374.30 an ounce, July silver added 12.7 cents to close at $13.13 an ounce."

"Meanwhile, the World Gold Council reported that investment demand was down in the first quarter, according to Nadler. 'Gold cannot ignore a 26% drop in investment demand at a time when physical demand was already not so hot,' he said."

"So, 'yes, it does look like $650/$630/$605 are the next bowling pins down the lane,' he said. 'But we are sure to hear that all is well and the bull market has resumed, as soon as we get the next $20 upside pop.'"

"Palladium is moving higher 'underscoring what we have seen from some clients taking positions in the physical metal,' said Neal Ryan, director of economic research at Blanchard. 'This is allowing some investors to benefit from increasing ETF demand in Europe and the potential, however remote, that ETFs may possibly spring up in the United States.'"

"At the same time, Ryan pointed out that while platinum and palladium continue to grab the headlines in the precious-metals markets and sentiment around the markets become increasingly bearish toward the outlook for gold and silver, 'we believe it is the true contrarian that will benefit from the situation at hand.'"

"'The fundamental picture for the market continues to improve and it might be good to have the gold and silver markets take some time away from the constant market analysis while some technical damage is repaired,' Ryan said."

MarketWatch reports on the markets. "Gold futures posted modest gains Friday, as weakness in the dollar, which fell against the yen after China widened the yuan's trading band, underpinned demand for the precious metal. Gold for June delivery closed up $4.80 at $662.0 an ounce on the New York Mercantile Exchange. However, gold futures have lost more than $10 on the week."

"'The dollar giving up some of its recent gains certainly propped gold higher today,' said David Meger, senior metals analyst at Alaron Trading. 'It prompted a bit of short covering in the precious metals market.'"

"There has also been 'a lot of speculation about the bank of China tightening their monetary policy,' Meger said. That speculation will likely be a negative force towards both the base and the precious metals in the near term."

"'This [move was] in an effort to curb rampant speculative fever and overheating conditions in its markets,' said Jon Nadler, analyst at Kitco Bullion Dealers. 'We cannot over-emphasize the bearish implications of this initial move to curb the euphoria that has buoyed speculators for so long,' Nadler said."

"Japan's yen gained on the news from China. The dollar traded mixed against other major currencies ahead of a report expected to show U.S. consumer sentiment fell slightly this month."

"Other metals prices also posted gains. July platinum closed up $8.30 at $1,326.20 an ounce. June palladium rose $4.85, or 1.4%, to close at $362.25 an ounce. July silver ends up 12.0 cents at $13.003 an ounce."

From China Daily. "China will widen the floating band of yuan against US dollar from 0.3 percent to 0.5 percent as of May 21, the People's Bank of China, or the central bank, announced on Friday."

"'The higher flexibility indicated that the fluctuations of yuan will rely more on market forces. It's a good step forward in the correct direction,' said Zuo Xiaolei, an analyst with Galaxy Securities."

Bloomberg reports on currencies. "The dollar advanced to the highest in almost three months against the yen and rose a second day versus the euro after a government report pointed to resilience in the labor market. Investors bought the U.S. currency as first-time claims for jobless benefits unexpectedly dropped to a four-month low."

"The yen's decline started after a report showed Japan's economy slowed in the first quarter and the central bank kept interest rates unchanged at 0.5 percent, the lowest among major economies."

"The dollar rose 0.4 percent to 121.25 yen at 10:16 a.m. in New York and earlier touched 121.29, the highest since Feb. 23. The U.S. currency also gained 0.2 percent to $1.3489 per euro. It has rebounded from a record low of $1.3681 set April 27."

"The U.S. currency also increased 0.6 percent against the New Zealand dollar, 0.5 percent versus the Australian currency, 0.1 percent against the British pound and 0.3 percent versus the Swiss franc."

"The Canadian dollar advanced against all 16 major currencies tracked by Bloomberg after a government report showed annual core inflation, which excludes food and energy, accelerated to its highest in more than four years last month, bolstering speculation of higher interest rates."

"'The market has been so short the dollar, and every time you have some good data coming out of the U.S., it will push people to cut their dollar shorts,' said Tim O'Sullivan, chief foreign exchange trader at Forex.com."

"The report followed data yesterday that showed industrial production advanced more than economists forecast and housing starts unexpectedly gained last month."

"Volatility on one-month dollar-yen options fell to 6.25 percent, from 6.4 percent yesterday, and 7.45 percent a month earlier, encouraging investors to borrow yen and buy higher- yielding assets abroad as lower volatility implies smaller exchange-rate fluctuation risk."

"The Japanese currency has fallen against 15 of 16 major currencies tracked by Bloomberg this year as low interest rates in Japan spurred the so-called carry trades. The yen has lost 1.8 percent against the dollar and 3.9 percent versus the euro over the same period."

From MarketWatch. "Gold futures closed lower Thursday to tally a two-day drop of nearly $16 an ounce and copper futures tumbled more than 3% to mark their fourth losing session in a row as traders eyed economic data in the U.S. and moves in the dollar for hints on demand for the metals."

"Gold for June delivery fell $4.30 to close at $657.20 an ounce on the New York Mercantile Exchange, following a low of $654.30, levels not seen since March 15. The contract lost 1.9%, or $13, on Wednesday."

"'The economic data flows are indeed only adding to short-term indecision, but perhaps also to the downside bias in gold,' said Jon Nadler, metals analyst at Kitco Bullion Dealers. 'And the odds...are apparently still on the side of the shorts.'"

"Overall, the gold market appears to be 'trading on technicals rather than any fundamental news, with the sell-side pressure and shorts currently in control of the market,' said Neal Ryan, director of economic research at Blanchard."

"Ryan admits that Blanchard's prediction for $700 gold in a matter of weeks was wrong. Even so, 'the fundamental picture for the market is more bullish today for increasing prices than it was just two years ago at $400 per ounce,' he told clients."

"Also on Nymex, July silver fell 4.7 cents to finish at $12.883 an ounce, ending a bit above the more than two-month, intraday low of $12.765. July platinum shed $7.90, or 0.6%, to close at $1,317.90 an ounce, but June palladium tacked on $2.90 to end at $360.40 an ounce."

From Reuters. "Selling from liquidation in bullion exchange-traded funds and chart-based sales sent U.S. gold futures to a lower finish for a second straight day on Thursday, as slumping copper prices helped keep the precious metal below $660 an ounce."

"'We broke through major support levels in the gold, and there was also follow-through liquidation from the ETFs. So there's a lot of pressure on the metals this morning,' said one New York dealer."

"StreeTRACKS gold shares, the world's largest gold ETFs, accounting for more than 80 percent of the metal held by all such funds, dropped 8 tonnes of its bullion in one day on Wednesday."

"The dealer said a slide in U.S. copper futures on Thursday hurt the entire precious metals complex. Copper's decline followed a 3 percent drop Wednesday. U.S. copper futures ended down another 3.4 percent on Thursday."

"On Wednesday, a combination of heavy liquidation by funds, a stronger dollar and lower crude oil drove U.S. gold and silver futures to their lowest finishes in two months."

"Gold prices have been rising in recent weeks toward their 27-year peak of $730, set last May, but have failed to break the psychological $700 mark this year."

MarketWatch reports on metals. "Gold futures dropped $13 an ounce to close Wednesday at their weakest level in two months, as better-than-expected U.S. housing starts and industrial production in April lifted the dollar to an almost three-month high against the yen, weakening demand for the precious metal."

"Gold for June delivery lost 1.9%, or $13, to close at $661.50 an ounce on the New York Mercantile Exchange, a level not seen since March 19. 'We believe the fall in gold reflected the performance of the dollar,' said Julian Phillips, an analyst at GoldForecaster.com."

"July silver also dropped 2.9%, or 38.5 cents, to close at $12.93 an ounce. That was its lowest closing level since March 5."

"The dollar rallied across the board Wednesday, touching its highest level in almost three months against the yen after reports showed stronger-than-expected U.S. housing starts and industrial production for last month."

"'Funds are obviously increasing their yen carry trade loans given the weakness in the Japanese yen,' said Ned Schmidt, editor of the Value View Gold Report. 'Those monies are flowing into paper assets. All of this is creating an excellent buying opportunity' for gold, he said."

"'While it's the worst seasonally favorable period for gold (May-August), numerous technical indicators are screaming for a major bottom as early as today or on a wash-out to $650,' said Peter Grandich, editor of the Grandich Letter. 'The bullish sentiment among gold timers is almost nil -- another bullish factor that says we're close to a major bottom,' he said."

"'The emergence of support around $665 yesterday is encouraging, with further support expected at $662 to $660 and around the 100-day moving average at $658.75,' said James Moore, metals analyst at TheBullionDesk.com. 'However, further failures to climb towards key resistance pegged at $694 might encourage another round of long liquidation from fund players,' he said."

"Other metals prices were lower Wednesday. June palladium shed 95 cents to close at $357.50 an ounce and July platinum fell $13.80 to end at $1,325.80 an ounce."

From Bloomberg. "The yen traded near a three-month low against the dollar on speculation signs of weakening growth will keep the Bank of Japan from lifting borrowing costs at a faster pace this year."

"'The BOJ is hesitant to hike interest rates aggressively as economic data have been on the soft side,' said Brian Dolan, research director at Forex.com. 'The market doesn't expect the BOJ to do anything in the near term, which encourages yen selling.'"

"The yen traded at 120.79 per dollar and 163.26 per euro at 6 a.m. in Tokyo. The Japanese currency fell 0.5 percent against the dollar yesterday and touched 120.84, the weakest since Feb. 26. The yen also reached an all-time low of 163.90 per euro yesterday."

"The dollar traded at $1.3515 per euro. The U.S. currency strengthened 0.6 percent yesterday against the euro, the most since March 5. The U.S. currency tumbled to a record low of $1.3681 per euro on April 27, and has lost 2.3 percent this year against the euro on bets the U.S. economy will trail Europe's."

"New Zealand's dollar fell on speculation the U.S. economy is performing better than expected, reducing the prospect of a cut in interest rates there and luring investors back to the dollar."

"The U.S. currency rose to its highest in almost three months against the yen after reports showed industrial production increased more than expected and housing starts unexpectedly advanced, diminishing chances the Federal Reserve will cut rates."

"The New Zealand dollar, known as the kiwi, gained 17 percent in the past 12 months, supported by borrowing costs 2.5 percentage points higher than the U.S.' 5.25 percent rate."

"'The U.S. data pushed at the timing of Fed rate cuts,' Danica Hampton, currency strategist at Bank of New Zealand Ltd. in Wellington said. 'The U.S. dollar made a recovery and that kept the kiwi under pressure.'"

"The New Zealand dollar fell 0.6 percent to 73.29 U.S. cents at 9:11 a.m. in Wellington, from 73.73 cents in late Asian trading yesterday."

"New Zealand's record official cash rate is the highest after Iceland's among countries with the top rating at Moody's Investors Service. It is the best performing major currency tracked by Bloomberg in the past 12 months."

"The currency has gained 29 percent against Japan's yen in the past year, buoyed by the so-called carry trade, where investors borrow cheaper currencies to invest in higher yielding assets elsewhere. Japan's 0.5 percent target rate is the lowest among major economies, and is 7.25 percentage points lower than New Zealand's."

"The local dollar's decline was helped by Japan's Trade Minister, Akira Amari, Hampton said. Interest rates will eventually rise to levels where it would diminish the impact of the carry trade, Amari said May 16 in Paris, according to the Reuters newswire."

"'The comments knocked the kiwi lower against the yen,' Hampton said. New Zealand's currency traded at 88.54 yen, from 88.84 yen in late in Asia yesterday."

The Associated Press reports on currencies. "The dollar fell against the euro and British pound Tuesday after a tame U.S. inflation report damped expectations for higher interest rates in the world's largest economy. The euro rose as high as $1.3608 before settling back to $1.3592 in late New York trading, up from $1.3541 late Monday. That put the 13-nation currency back within one cent of its all-time high of $1.3682, reached last month."

"The pound rose to $1.9853 from $1.9732, while the dollar barely fell to 120.26 Japanese yen from 120.29 yen."

"The U.S. Labor Department reported that consumer prices rose by 0.4 percent last month following a 0.6 percent jump in March. The April increase was slightly lower than expected, even though gasoline prices surged."

"Economic data are being watched closely for clues on the Federal Reserve's future interest rate course. Higher interest rates, used to combat inflation, can bolster a currency by making certain types of investments more attractive."

"The European Central Bank has increased rates steadily over recent months and is expected to raise them at least once more, while the U.S. Federal Reserve is expected to continue leaving its rates unchanged."

"In other trading, the dollar bought 1.2153 Swiss francs, down from 1.2189 late Monday, and 1.0982 Canadian dollars, slipping from 1.1072."

From MarketWatch. "Gold futures climbed more than $4 an ounce Tuesday to close at a nearly one-week high, moving inversely with weakness in the U.S. dollar on the heels of fresh U.S. economic data, which showed that consumer inflation eased a bit in April."

"Gold for June delivery closed up $4.40 at $674.50 an ounce on the New York Mercantile Exchange after trading at $675. The contract marked its strongest close since May 9."

"Strength in oil prices, which sparked concerns over the economy, also contributed to gold's climb Tuesday. June crude climbed above $63 a barrel for the first time since May 4."

"Other metals prices were mixed. June palladium fell $2.25 to finish at $358.45 an ounce while July platinum tacked on $10.30 to end at $1,339.60 an ounce.
Prices for the platinum group metals declined Monday after a report released Monday from metals refiner Johnson Matthey said palladium demand fell in 2006 and the market ended the year with a surplus of supplies."

"Meanwhile, July silver followed gold higher, closing 8 cents higher at $13.315 an ounce on Nymex. The '2007 Silver Yearbook,' issued by researchers CPM Group late Monday, painted a 'bullish picture for the silver market as surging investment demand and lower mine supplies easily negated lower industrial demand,' James Moore, an analyst at TheBullionDesk.com, said."

"Jon Nadler, metals analyst at Kitco Bullion Dealers, also cited the CPM Group report, pointing out that global investors, for the first time since 1989, were net buyers of silver during 2006."

"'This development is seen by CPM as being as important to the silver market as our oft-cited gold market news that since 2005 investors own more gold than all central banks put together,' Nadler said."

The Associated Press reports on currencies. "The dollar was mixed against other major currencies Monday. The euro traded at $1.3534 in European trading, down from $1.3535 late Friday in New York. Later, in midday trading in New York, the euro rose to $1.3544."

"In midday New York trading, the dollar bought 120.35 yen and 1.2195 Swiss francs, and the pound was worth $1.9797."

"The euro was helped by data showing that euro-zone manufacturing activity in March beat expectations. Led by Italian and Spanish factories, industrial production rose by 0.4 percent, better than analysts' forecast of 0.3 percent."

"Upbeat economic data underline the likelihood of the European Central Bank increasing interest rates further, while the U.S. Federal Reserve is thought likely to continue leaving its rates unchanged."

From Bloomberg. "Gold and silver prices fell on speculation the euro's rally against the dollar will stall, reducing the appeal of the precious metals as alternative investments."

"Gold has moved in tandem with the euro about 74 percent of the time in the past year. Before today, gold was up 5.4 percent this year while the euro climbed 2.5 percent against the dollar. The metal reached an 11-month high on April 20 as the euro headed for a record against the dollar."

"'A lot of gold's movement for now is going to be tied to the dollar,' said Frank Lesh, a trader at FuturePath Trading LLC. 'The dollar is going to have to look like it's going to make a new low for gold to pull in capital.'"

"Gold futures for June delivery dropped $2.20, or 0.3 percent, to $670.10 an ounce on the Comex division of the New York Mercantile Exchange. The price dropped 2.5 percent last week to the lowest in a month. Silver for July delivery fell 7 cents, or 0.5 percent, to $13.235 an ounce. The metal fell 1.7 percent last week, the fourth-straight weekly loss."

"'What we are seeing in the currencies will be the primary driver for gold prices,' said Matt Zeman, a trader at LaSalle Futures Group. 'Nervous investors are going to be very cautious and may look for any reason to sell.'"

"A break below $665 an ounce may trigger more selling, Zeman said. The metal fell as low as $667.50."

"Investment demand for metals and other commodities may shrink should the U.S. economy slow, said Ron Goodis, futures trading director at Equidex Brokerage Group Inc. 'We are starting to see gold crack a bit,' Goodis said. 'If the economy continues to weaken more than expected, this will hurt all commodity prices.'"

From MarketWatch. "'The gold market has "growing anxieties about where the top end of the current range lies and what selling the attainment thereof might precipitate,' said Jon Nadler, metals analyst at Kitco Bullion Dealers."

"'This week's economic statistics will offer plenty of data worth pondering (CPI, housing starts, capacity utilization, jobless claims and consumer sentiment), and might bring gold's short-term price prospects into sharper focus,' said Nadler. 'Although, much still depends on what level the U.S. dollar will find a comfortable level to trade at.'"

"When asked what would take gold prices to the $700 level, Nadler said 'it would take a set of geopolitical conditions and economic factors out there, which are currently not in the equation, to convince investors to start loading up on this hedge asset a little bit more than they have been.'"

"Also on Nymex, palladium suffered a sizable loss in the wake of a report from metals refiner Johnson Matthey which showed that palladium demand fell in 2006 and the market ended the year with a surplus of supplies."

"June palladium dropped $7.95 to close at $360.70 an ounce in New York. Meanwhile, global platinum supplies outpaced consumption in 2006 for the first time in eight years, as world jewelry demand dropped more than 18%, Johnson Matthey's 'Platinum 2007 Review' report said."

"The high price of platinum and an increase in recycled jewelry cut overall world jewelry demand for the metal by 18.3%, or 360,000 ounces, last year, to 1.61 million ounces, it said."

"Platinum for July delivery fell $12.40 to close at $1,329.30 an ounce Monday.
The platinum group metals market is 'certainly looking heavy following the JM report," said TheBullionDesk.com's James Moore."

"Moore said he believes palladium is 'at risk of some sizeable long selling following the recent build in fund longs [and] technical support at $354 needs to hold to avoid a correction back to $330.'"

MarketWatch reports on precious metals. "Gold futures closed higher Friday, staging a partial recovery from a more than $15-an-ounce drop in the previous session as strength in oil prices and some weakness in the U.S. dollar lent support to the precious metal.
But Thursday's drop in the benchmark June gold contract to its lowest closing level since late March was the biggest contributor to the $17.40, or 2.5%, loss in prices for the week."

"'Only about a third of yesterday's damage was offset by today's bounce, and the mood remains cautious, at best. A marginal decline in the U.S. dollar gave gold prices the smelling salts they so badly needed after yesterday's swoon,' said Jon Nadler, an analyst at Kitco Bullion Dealers."

"Gold for June delivery rose $5.30 to close at $672.30 on the New York Mercantile Exchange Friday."

"'Gold is recovering after this morning's clearly disappointing retail-sales number and PPI lift,' said Kevin Kerr, editor of Global Resources Trader. 'Bond bulls are back and the dollar bears seem to have all the ammunition they need to take the greenback down a few pegs at this point, and they likely will,' he said."

"But the contract closed down $15.50, or 2.3%, at $667 an ounce Thursday to mark a seven-week low after the dollar rose to a one-month high against the euro. Peter Grandich, editor of the Grandich Letter, said traders were disappointed that gold could not breach the $700 level. That 'led to some chart selling, a short-covering rally in the U.S. dollar and an unusually high number of outstanding contracts that need to be rolled over on the Comex,' he said. 'So, gold is back at the key support level around $665.'"

"'I expect some sloppiness for the near term, but I see the $700 level being taken out before the end of June,' he said."

"Still, sentiment has been 'damaged' as gold lost around 3% in the latest slide since April 23, said Nadler. 'Traders are suddenly much more aware of minute details such as the cessation of the May Indian wedding season tomorrow,' he said. 'The astounding drop in retail sales that hit the markets...yesterday still should be fully factored in before making any rash trading decisions.'"

"In the backdrop, the dollar dipped against other major currencies after government reports showed weaker-than-expected U.S. retail sales and benign core wholesale inflation for April."

"For now, strength in oil prices appeared to provide some support, with higher energy prices raising gold's appeal as an investment hedge. Crude-oil and gasoline futures extended their gains Friday as traders continued to show concern over U.S. gasoline supply levels ahead of the summer-driving season."

"Other metals prices followed gold higher, with July silver up 16.5 cents to close at $13.305 an ounce, though it was 1.7% below last week's close. July platinum rose $17.50 to finish at $1,341.70 an ounce, up almost $13 from a week ago. June palladium added $4.90 to close at $368.65 an ounce, finishing below last week's close of $377."

From Reuters. "Most-active gold for June delivery on the COMEX division of the New York Mercantile Exchange settled up $5.30 at $672.30 an ounce amid heavy volume, after prices also hit a five-week low on Thursday. Traders said short positions were being reversed after data showed tumbling U.S. retail sales and subdued inflationary pressures."

"'It took a while, but the dollar came off after the data, people started to think about rate cuts,' a London-based trader said. 'Higher oil prices will help precious metals.'"

"However, even though the dollar is lower, it is still near one-month highs against the euro. That, combined with Thursday's stock market losses, points to a nervous mood among investors, who are likely to sell their holdings, including gold, much as they did earlier this year."

"'There's a whiff of risk aversion in the air, and that seems to be encouraging people to reduce risk,' said John Reade, analyst at UBS, adding that many asset prices had returned to levels before the correction started in February."

"Gold bulls expected prices would eventually test the 26-year highs of $730 an ounce set last May. But that hope faded and gold's prospects could deteriorate further if U.S. Treasury Secretary Henry Paulson's support for a stronger dollar is the beginning of a new trend."

"Analysts also cited heavy sales by European central banks for gold's decline. The Bank of Spain on Thursday said it sold 1.3 million ounces of gold from its reserves in April and another 1.3 million ounces in March."

"Another major indicator of investor sentiment is the volume of flows into and out of exchange-traded gold funds. The New York-listed StreetTracks gold fund, the world's largest gold ETF, which accounts for about 80 percent of the metal jointly held by such funds, lost more than five tonnes between Wednesday and Thursday."

"'We tend to concur with the ETF trends,' JPMorgan said in a note. 'Combined with a weak volatility environment, the most likely outcome in the very short term is further selling on rallies towards the top end of the $685 to $695 ounce range.'"

MarketWatch reports on the markets. "Gold futures dropped more than $15 an ounce Thursday to close at their lowest level in seven weeks, as mixed U.S. economic data and comments from the European Central Bank chief helped push the U.S. dollar to a one-month high against the euro. Gold for June delivery closed down $15.50, or 2.3%, at $667 an ounce on the New York Mercantile Exchange. That was the contract's lowest closing level since March 23 though during the session, it fell to $666, an intraday level not seen since April 2."

"The June gold contract has now lost $23.40 in a three-session losing streak."

"The 'dollar looks stronger today, [so] the funds are pressing gold down to support levels,' said Julian Phillips, an analyst at GoldForecaster.com. 'The dollar is fighting hard not to fall, despite a fundamental picture that says it should. Once it gives us clear direction, gold will react too,' he said."

"Overall, 'it does seem the market is lacking some clarity in short-term direction, and may suggest further consolidation could be on the cards,' said James Moore, an analyst at TheBullionDesk.com."

"On Thursday, the European Central Bank left its interest rates at 3.75% and signaled a rate increase in June. Comments from ECB President Jean-Claude Trichet indicated 'that maybe the ECB's tightening campaign is a little bit closer to the completion than people had thought, and that has caused some of the change-over in sentiment,' said David Watt, senior currency strategist at RBC Capital Markets. So some investors 'are taking some long euro and short dollar positions of the table.'"

"Against this backdrop, the dollar touched two-month peak against the yen and a one-month high vs. the euro Thursday."

"Meanwhile, the Bank of England implemented its fourth rate rise since August, raising base rates by a quarter-point to 5.5%. And the Federal Reserve decided Wednesday to hold short-term interest rates steady and said nothing that indicates it is prepared to move interest rates anytime soon."

"'What rattled the markets was their statement that inflation risks are `somewhat elevated',' according to Mike Rapson, an analyst at Man Financial. Rapson wrote in his daily metals report that 'those looking for a rate cut this year now need to reevaluate their positions.'"

"But Phillips pointed out that the 'impression given is that it will react to higher inflation but will not preempt it. [So] the dangers of inflation with falling growth [stagflation] are now apparent,' he said. 'This is gold-positive and dollar-negative as the trade deficit will continue at excessive levels in a climate that could discourage the investment of surplus dollars [Asian nations in particular] back into the States,' he said."

"Other metals prices also posted losses. July silver fell 33 cents to close at $13.14 an ounce, marking the contract's lowest closing level since March 14."

"July platinum fell $15.30, or 1.1%, to close at $1,324.20 an ounce and June palladium declined $6.65 to end at $363.75 an ounce."

Reuters reports on the US dollar. "The dollar gained against the euro and yen on Wednesday after the Federal Reserve held benchmark U.S. interest rates steady and said its main worry is that inflation will fail to moderate."

"'The dollar is gaining across the board because the Fed made no recognition of the March slowdown in core inflation, the slowdown in payrolls, industrial production, and consumer spending,' said Ashraf Laidi, chief FX analyst at CMC Markets in New York. 'The fact that the Fed shrugged off these important factors is a signal to the market that the Fed will hold rates steady for the rest of the year.'"

"The euro was down 0.1 percent at $1.3525 after the decision while dollar/yen gained 0.1 percent at 120.09 yen."

"In a statement outlining its decision that hewed closely to its last announcement in late March, the Fed nodded to recent sluggish economic growth, but held to its view that the economy was likely to expand at a moderate pace in coming quarters. It also said: 'Core inflation remains somewhat elevated.'"

"Investor focus now shifts to rate decisions on Thursday from the Bank of England, which is seen raising rates to 5.5 percent, and the European Central Bank, which is likely to hold rates at 3.75 percent but signal a hike in June. Sterling was up 0.2 percent at $1.9934."

"A spate of soft U.S. economic data has helped push the dollar to record lows against the euro and 26-year lows against sterling. Michael Woolfolk, senior strategist at The Bank of New York, said the euro may test its lifetime high above $1.3680 and make a run at $1.3700 by the end of the week."

From MarketWatch. "Gold futures closed lower Wednesday, as crude-oil prices plunged, dragging metals prices down along with them. Before the Federal Reserve announced that it kept rates on hold as expected, gold for June delivery ended down $4.90 at $682.50 an ounce on the New York Mercantile Exchange."

"'Despite indications that waiting for the Fed to decide the fate of interest rates was going to at least hold gold near $685, the falling price of crude oil impacted the bullion market first,' said Jon Nadler, analyst at Kitco Bullion Dealers. 'Any post-Fed rebound may indeed be feeble at this point, as the market appears to be looking for renewed tests at lower levels,' Nadler said."

"'The latest Fed decision should have little or no impact on the secular bull market in gold past a few hours or days,' said Peter Grandich, editor of the Grandich Letter. 'There's no way the Fed can raise rates, especially after they noted the housing decline is still 'on-going.'"

"'This means little help for the terminally ill U.S. dollar, other than short-covering rallies and profit-taking,' Grandich said. 'Gold's ability to march towards $700, albeit slower than some expected, is a testament to the physical demand in the face of heighten central bank selling and bears trying to cap the market.'"

"In after-hours, electronic trading, gold futures fell $5.10 to $682.30 an ounce. After the Fed decision, the dollar edged higher against the euro."

"Also on Nymex Wednesday, July silver fell 13.0 cents, or 1%, to $13.470 an ounce, July platinum fell $3.70 to $1,339.50 an ounce, and June palladium fell $5.55 to $370.40 an ounce."

The Associated Press reports on currencies. "The dollar rose against the euro Tuesday after German industrial production fell more than expected in March. The 13-nation euro was quoted at $1.3545 in late New York trading, down from $1.3603 Monday and well off last month's all-time high of $1.3682."

"The euro dropped after the German Economy Ministry reported industrial production in the country fell 0.1 percent in March, compared with a 0.4 percent gain the month before. Analysts had expected the figure would remain unchanged."

"The British pound fell to $1.9889 from $1.9931 late Monday, and the Japanese yen slid to 119.95 from 120.11. In other trading, the dollar bought 1.2172 Swiss francs, up from 1.2115 late Monday, and 1.1048 Canadian dollars, rising from 1.1020."

"The drops came as central banks in Europe, Britain and the United States are set to meet this week."

From Bloomberg. "New Zealand's dollar may strengthen on speculation the interest-rate gap with the U.S. will remain unchanged, luring investors to the nation's higher-yielding assets. The local dollar bought 73.73 U.S. cents at 9:12 a.m. in Wellington, from 73.82 cents in late Asian trading yesterday."

"New Zealand's currency fell yesterday after investors trimmed their investments in the carry trade, said Danica Hampton, currency strategist at Bank of New Zealand Ltd. in Wellington. The New Zealand currency traded at 88.44 yen, from 88.47 yen late in Asia yesterday. The carry trade has helped the local currency gain 27 percent against the yen the past year."

"'The market tends to interpret Federal Reserve comments as quite dovish and hasn't fully discounted the risk of rate cuts,' said Meg Browne, currency strategist at Brown Brothers Harriman & Co. in New York. 'We'll probably see some strength in the kiwi on anticipation of that U.S. dollar weakness.'"

From Reuters. "A stronger dollar against the euro and follow-through sales from the previous session sent gold futures to a lower finish on Tuesday, as investors held their bets ahead of interest-rate decisions from major central banks this week."

"Most-active gold for June delivery on the COMEX division of the New York Mercantile Exchange settled down $3.00 at $687.40 an ounce, traded in a range of $684.10 to $691.30."

"The euro slid against the dollar on technical chart-based selling. A stronger greenback makes dollar-denominated assets like gold more expensive for investors holding other currencies. Bart Melek, global commodity strategist at BMO Capital Markets, said in a note that gold stayed relatively firm after easing in early morning trade as investors positioned ahead of the Federal Open Market Committee rate-setting announcement on Wednesday."

"Melek said he expected selling pressure in the dollar and global inflation concerns should lift gold 'materially' above $700 an ounce later in the year."

"With the Federal Reserve, European Central Bank and Bank of England all setting interest rates this week, precious metals investors were unwilling to add to their current positions."

"Investors will take their cues from the rate-setting decisions, which often affect gold prices because of interactions in the currency markets."

"Spot gold was quoted at $684.30/5.80 an ounce, below a late quote of $688.90/9.40 in New York on Monday. The London afternoon gold fix was set at $684.25 an ounce."

"COMEX July silver finished down 4.0 cents at $13.600 an ounce, traded from $13.405 to $13.665. Spot silver was quoted at $13.48/3.51 versus $13.51/3.54, its previous finish late Monday in New York. Silver fix was set at $13.48 an ounce in London."

"Platinum futures fell on Tuesday after they hit a life-of-contract high on Monday due to strong buying in the Asia markets. July platinum ended down $7.70 at $1,343.20 an ounce. Spot platinum fetched $1,333.00/1,338.00."

"June palladium dropped $3.25 to close at $375.95 an ounce. Spot palladium was quoted at $370.00/374.00."

MarketWatch reports on the markets. "Gold futures advanced on Monday to mark a three-session win of more than $15 an ounce as the U.S. dollar fell against other major currencies, underpinning demand for the precious metal. For this week, 'it's all a currency play,' said Neal Ryan, director of economic research at Blanchard. 'With the Europeans and Asian central banks continuing to raise rates while the Fed is in no position to do the same,' gold and, to a smaller extent, silver are 'becoming great currency plays.'"

"Gold for June delivery gained 70 cents to close at $690.40 an ounce on the New York Mercantile Exchange. The contract closed below the day's high of $693.20, but it's tallied a $15.30, or 2.3%, gain in three trading sessions."

"The dollar fell against other major currencies but stayed in narrow ranges Monday, as investors awaited central-bank meetings on interest rates in the U.S. and Europe later in the week."

"'Precious metals and the dollar index will be very volatile on interpretation of the language in the Fed statement, but we believe that after the news is digested and the ECB/Bank of England raise rates on Thursday, the dollar should come under renewed pressure to the downside while precious metals enjoy the bounce,' said Ryan."

"'This week should go a long way toward underscoring the importance of gold and silver trading as currency alternatives,' Ryan said. For now, he said he's 'waiting to see if today or tomorrow we challenge the $694-$695 resistance level that a lot of analysts have pegged as the major resistance point right now.'"

"'If we reach and eclipse that level before the Fed meeting and get some dollar-negative news out of the Fed this week, I think we'll finally be up and over the $700 and off to test the $730 high in a flash,' Ryan said."

"Also on the Nymex Monday, July silver rose 11 cents to close at $13.64 an ounce, July platinum gained 1.7%, or $22.10, to finish at $1,350.90 an ounce and June palladium rose $2.20 to close at $379.20 an ounce."

"Crude futures fell Monday to close at their lowest level in almost seven weeks, tallying a loss of more than 7% during a losing streak that's spanned six sessions. Traders were betting that U.S. data, due later this week, will reveal ample supplies of crude and gasoline inventories may have even declined."

"Crude oil for June delivery fell 46 cents, or 0.7%, to close at $61.47 a barrel on the New York Mercantile Exchange after a low of $60.90. The contract hasn't traded or closed at a level this low since March 21."

"It 'looks like some [supply] estimates have builds or only small draws likely this week,' said Jason Schenker, an economist at Wachovia Corp. 'That price is bearish.'"

From Bloomberg. "Central bank officials are not the only people distressed by lax lending standards. Even the deal makers who depend on low-cost financing with few strings attached are complaining that money is too cheap and there are not enough strings."

"'There's too much liquidity in the system,' Philip Yea, chief executive of the largest publicly traded venture-capital and buyout firm in Europe, said last month. 'There's too much debt available.'"

"Steve Rattner, co-founder of Quadrangle Group, a buyout firm, said in January that 'the world isn't pricing risk appropriately. Investors are simply not being paid for the risks they're taking.'"

"Larry Fink, chief executive of BlackRock, a fund manager based in New York, said the subprime debacle had had a domino effect on the rest of the credit market - just not the one you might have expected."

"'We're seeing fewer investments in subprime, but that money needs to be put to work so they're going into other credit markets,' said during a recent interview with The Financial Times. 'Historically, when we've seen one problem, we've seen an adjustment throughout the marketplace. We've seen no indication of that yet. We've seen the actual opposite.'"

MarketWatch reports on the markets. "Gold futures closed near $690 an ounce Friday to mark their strongest finish in nearly two weeks as the U.S. dollar fell against major currencies in the wake of data that showed the smallest increase in payroll employment since November 2004."

"'The U.S. dollar's ,' said Peter Spina, an analyst at GoldSeek.com. 'Gold will push up against the $700 resistance and either see another rally fizzle or see a large wave of momentum kick in and take this market much higher.'

"Still, Spina said the outlook is unclear. 'I am unable to foresee which route we are headed as the bears and bulls struggle to get the upper hand.' For now, 'the market remains firm on pullbacks, so the inevitable break of $700 is just a question of when,' he said."

"Gold for June delivery gained $5.30 to close at $689.70 an ounce on the New York Mercantile Exchange, its highest closing level since April 23. On Thursday, gold futures gained $9.30, the benchmark contract is up $7.90, or 1.2%, for the week."

"'Look for continued strength as the day wears on, but keep a keen eye on next week as all market participants will be back in full force and as the Fed watching gets under way,' said Jon Nadler, analyst at Kitco Bullion Dealers. The Federal Reserve will meet Wednesday."

"'A test, if it comes, of the $695 area [for gold] may succeed this time around,' said Nadler."

"The dollar's weakness contributed to gold's latest rise. The greenback edged lower after the Labor Department said that non-farm payrolls expanded by 88,000 in April, less than the 100,000 expected by economists surveyed by MarketWatch. See full story.
The euro was last up 0.3%, while the dollar was down 0.2% vs. the yen. See Currencies."

"'Earlier speculation that U.S. jobs growth may reveal the weakest number in some 24 months, became a stark reality,' said Nadler. 'This news further undercut the dollar and extended expectations that next week's Fed meeting will result in (at least) a continuation of the thus far neutral stance on dollar rates that it had to adopt due to the conundrum posed by rising inflation and sluggish growth (in certain sectors of the economy)."

"So 'gold once more became a bet to the long side for funds (if not quite yet for the individual investor who may seek a validation of above $695 to join the party),' he said. 'Spot bullion rose by $4.50 as soon as the news hit the wires.'"

"Silver also strengthened. July silver added 2 cents to finish at $13.53 an ounce after a one-week high of $13.70. But it was down 0.3% for the week."

From Bloomberg. "Platinum rose the most in two weeks in New York on increased demand from automakers that use the metal to make pollution-control devices. Palladium fell."

"Consumption of platinum for catalytic converters rose 6.5 percent last year to a record 4.2 million ounces, London- based research company GFMS Ltd. said in a report April 25. Before today, platinum had gained 15 percent this year. China's car sales surged 25 percent last year, boosting demand."

"The underlying tightness of the supply demand situation remains supportive for platinum,' said Daniel Vaught, a commodity analyst at A.G. Edwards & Sons Inc."

"Platinum futures for July delivery gained $23.70, or 1.8 percent, to $1,334.50 an ounce on the New York Mercantile Exchange at 9:20 a.m., the biggest gain since April 20. The price rallied 3.2 percent this week after dropping 3.6 percent last week, the biggest weekly drop since December."

"Palladium for June delivery dropped $1.50, or 0.4 percent to $375 an ounce on the Nymex. Before today, most-active futures had gained 11 percent this year."

MarketWatch reports on currencies. "The dollar rose to a two-month peak against the yen and a one-week high vs. the euro Thursday, after a report showed the U.S. economy's non-manufacturing sectors grew at a faster-than-expected pace last month, easing some concerns about the fragile U.S. economic expansion."

"'Consolidation of short [dollar] positions ahead of tomorrow's non-farm-payrolls number remains the prevailing theme, as market players question whether U.S. sentiment has become overly pessimistic,' said Michael Woolfolk, senior currency strategist at Bank of New York."

"Late in New York, the euro traded at $1.3551 compared with $1.3592 late Wednesday, after touching $1.3544, the lowest level since April 23. The dollar was quoted at 120.37 yen, compared with 120.08 yen."

"The British pound traded at $1.9878 vs. $1.9890. The dollar also changed hands at 1.2161 Swiss francs, compared with 1.2136 francs."

"'The risk is that tomorrow's U.S. jobs data disappoints consensus estimates,' said Marc Chandler, global head of currency strategy at Brown Brothers Harriman. 'Nearly all the inputs economists use to arrive at a guesstimate have been weak.'"

The Dow Jones Newswire. "The U.S. dollar declined 1.1% on a trade-weighted basis in the first quarter of 2007 from the previous quarter, appreciating at the start of the period but reversing gains later on, the Federal Reserve Bank of New York said Thursday."

"U.S. monetary authorities didn't intervene in currency markets during the quarter, said William Dudley, executive vice president of the New York Fed, in the bank's quarterly report on Treasury and Federal Reserve foreign exchange operations."

"From late February until mid-March, global asset markets experienced a sharp repricing episode, during which the yen appreciated against the dollar and even more so against most high-yielding currencies, it said."

"'This broad-based reduction in risk appetite across global financial markets was largely attributed to renewed uncertainty regarding the U.S. economic growth outlook,' the report stated."

"Market participants cited 'concerns that weakness in the U.S. housing market, and developments in the subprime mortgage sector in particular, could reduce consumer spending and impact the broader U.S. economy,' it said."

The Financial Times. "Investors in US stocks have viewed the recent decline in the dollar as a green light to buy into large companies with international exposure. But analysts warn that a faltering currency looms as a double-edged sword for equity investors."

"'At some point, foreign investors will either hedge their US assets or repatriate,' says Dominic Konstam, head of interest rate strategy at Credit Suisse."

"So far, the dollar is seen to have made an orderly decline to compensate for a divergence between US and global growth rates. In the wake of last week's news that the US economy grew just 1.3 per cent during the first quarter, the dollar fell to a record low against the euro and multi-year lows against sterling and the Canadian, Australian and New Zealand dollars."

"This, analysts say, has encouraged local and some foreign investors to buy US stocks, which now look relatively cheap in their domestic currencies. 'The lower dollar has helped equities as the currency has adjusted for the slower economy and lower US investment returns,' said Mr Konstam. 'If the dollar doesn't fall, stock prices would come under pressure.'"

"While the dollar has fallen by about 2.75 per cent against the euro for the year to date, the Dow Jones Industrial Average is up 6.1 per cent and the S&P 500 is up 5.9 per cent. But if the dollar continues to weaken substantially, there will soon come a tipping point when foreign investors will no longer be satisfied with the returns from US assets."

"Jack Ablin, chief investment officer at Harris Private Bank, said he was 'a little worried about a replay of 1987 where the stock market kept going higher while the dollar quietly fell, adding: 'Eventually, investors stood up and noticed.'"

"The prospect of higher inflation beckons from a lower dollar, an outcome that, if accompanied by a slowly growing economy, represents the worst environment for stocks later this year, analysts say."

"The one factor keeping back the risk of a massive net selling of US stocks by foreigners is the weak yen, according to Mr Konstam. 'So long as the dollar is stable against the yen, the threat of such an outcome will stay contained. Dollar-Asia is a very important gauge of repatriation risk,' he says."

From Bloomberg. "Gold gained for the first time this week after Gold Fields Ltd., the world's fourth-biggest producer of the metal, said output declined at seven of its eight mines. Silver also increased."

"The Johannesburg-based company said today that its third- quarter production dropped 3 percent. Gold prices climbed 23 percent last year as global mine supply fell to a 10-year low, according to London-based GFMS Ltd."

"Gold for immediate delivery rose $2.20, or 0.3 percent, to $675.35 an ounce at noon in London, after declining $8.40 in the first three days of this week. Silver rose 11 cents to $13.325 an ounce, its first gain this week."

"Bullion is benefiting from dwindling supply and 'incredibly strong' demand from China, Gold Fields Chief Executive Officer Ian Cockerill told reporters today. Prices should climb above $800 over the next year, he said."

Bloomberg reports on currencies. "The dollar traded near a two-month high against the yen on speculation signs of growth in the U.S. manufacturing and services industries will alleviate concern over a slowdown in the world's largest economy. The U.S.currency has strengthened as evidence of economic resilience reduces expectations of a cut in borrowing costs by the Federal Reserve."

"'The dollar has some further upside to go,' said Samarjit Shankar, director of global strategy for the foreign exchange group in Boston at Mellon Financial Corp. 'You have basically had a one-way trade against the dollar over the past month. A string of positive data is going to introduce two-way risk.'"

"The dollar traded at 120.15 yen at 6:08 a.m. in Tokyo. It gained 0.24 percent yesterday and touched 120.28, the highest since Feb. 27, when equities tumbled in a global rout. The U.S. currency traded at $1.3591 per euro, up from the all-time low of $1.3681 set April 27."

"Investors aren't willing to place big bets involving the dollar before tomorrow's Labor Department payroll report forecast to show job growth slowed last month, said Robert Fullem, vice president of U.S. corporate currency sales at Bank of Tokyo- Mitsubishi UFJ Ltd. in New York."

"'People don't want to short the dollar before the payroll,' he said. 'The dollar will sell off if we have a weak payroll number.'' A short position is a bet on a currency's decline.'"

"'A soft number will counter dollar bulls' notions that the job market still maintains its pace,' said Boris Schlossberg, senior currency strategist in New York at DailyFX.com."

"New Zealand's dollar may fall a second day as its yield advantage over the U.S. narrowed after a report showed factory orders in the word's largest economy rose in March, reducing the chance of a cut to interest rates."

"The New Zealand and Australian dollars had the biggest fluctuation of any currency yesterday as their yield advantage declined. The spread between New Zealand and U.S. two-year bonds has contracted further to the narrowest in two-and-a-half weeks. U.S. factory orders rose 3.1 percent in March after a 1.4 percent gain in February, the Commerce Department said yesterday."

"'The shine's been taken off the kiwi as eyes turn to what's happening in the U.S. dollar and its recovery story,' Danica Hampton, currency strategist at Bank of New Zealand Ltd. in Wellington. 'It's led the market to think rates might not be cut as soon as we think and to a narrowing in the bond spread.'"

"The local dollar bought 73.77 U.S. cents at 9:11 a.m. in Wellington, after falling 0.7 percent to 73.76 cents in late Asian trading yesterday. It may fall to around 73.60 cents today, Hampton said."

"The yield premium, or spread, on New Zealand's two-year bonds over similar-maturity Treasuries was 2.48 percentage points, the narrowest since April 18."

From theStreet.com. "Precious metals prices were falling again Wednesday in New York on the back of a rallying dollar. June-dated gold contracts were dipping $3.90 at $673.40 an ounce in recent action. Silver was dropping 7 cents at $13.30 an ounce."

"Helping boost the greenback was a Commerce Department report showing a 3.1% jump in factory orders for March. The consensus forecast was for 2.1% growth. In addition, the figure for February was upwardly revised."

"'This was very good news coming right on the heels of Tuesday's strong [Institute for Supply Management] report,' says Ellen Beeson Zentner, an economist at Bank of Tokyo-Mitsubishi UFJ in New York. 'This pushes worries about the business sector aside, and now we can concentrate on the housing slump and its effect on the consumer.'"

"In the official sector, the European Central Bank says it sold 195 million euros of gold and receivables, or about 12 tons, last week, down from around 17 tons the week before."

"Platinum fell for the first session in three in New York on expectations that demand for the metal will weaken during holidays in Asia. Palladium rose."

"Markets in Japan shut this week for the 'Golden Week' holidays and China's market will be closed until May 7 for Labor Day. Japan was the biggest market for platinum jewelry and glass applications last year, accounting for 18 percent of demand, a report from London-based research company GFMS Ltd. showed."

"'This is the spring holiday season in Japan and China and the gift-giving season for them,' said Dan Vaught, a commodity analyst at A.G. Edwards & Sons Inc. 'They tend to buy a lot of jewelry before the holiday season, but once that holiday passes there's the tendency for them not buy as much.'"

"Platinum futures for July delivery dropped $1.80, or 0.1 percent, to $1,299.10 an ounce as of 1:21 p.m. on the New York Mercantile Exchange. Prices have gained 13.5 percent this year. Palladium for June delivery rose 80 cents, or 0.2 percent, to $374.95 an ounce."

The Associated Press reports on currencies. "The dollar recovered slightly against the euro on Tuesday after U.S manufacturing activity showed surprising strength in April that drove up prices for certain commodities. The euro dropped to $1.3620 from $1.3651 in New York late Monday, though remained within range of its all-time high of $1.3683, which it hit last week. The British pound edged up to $1.9996 from $1.9991."

"The manufacturing sector grew faster than expected and boosted prices for fuel, metals and corn-based products, according to the Institute for Supply Management. It was the highest reading in 11 months. The news supported the dollar, as it lessens the likelihood that the Federal Reserve will lower interest rates to encourage spending, especially as costs rise."

"The dollar climbed against the yen amid thin activity over Japan's Golden Week holidays, buying 119.72 yen compared to 119.56 yen late Monday. In other trading, the dollar rose against the Swiss franc, buying 1.2134 compared to 1.2077 late Monday."

From MarketWatch. "Gold futures closed Tuesday with a loss of more than $6 an ounce, with some strength in the U.S. dollar and weakness in oil prices easing investment demand for the precious metal."

"The market saw 'technical selling and some disappointment [that] gold could not test $700,' said Peter Grandich, editor of the Grandich Letter. 'Since the $665-$670 area was key resistance until recently, a retest of that area is healthy and likely the foundation gold needs to go through $700 later this spring.'"

"Gold for June delivery declined $6.20 to close at $677.30 an ounce. It hasn't closed at a level this low since April 9, but the day's low of $674.70 was the weakest intraday level since Thursday. The metals market saw thin trading Tuesday with markets in China and most of Europe closed for holidays."

"Looking ahead, 'the dollar is likely to be the key driver for gold in the coming sessions with a break through $1.37 against the euro potentially propelling gold back toward the $694 resistance line,' said James Moore, metals analyst at TheBullionDesk.com."

"'However, there is the risk that further failed rallies will trigger another correction, potentially leading to a test of chart support located around $664-$669,' Moore said."

"Crude-oil futures fell Tuesday, extending their prior-day decline ahead of the release of weekly data on supplies Wednesday that's expected to show a modest build in crude stocks. But news that Venezuela's government took over the country's last privately run oil fields provided some support."

"Back on the metals market, prices finished the session on a mixed note. June palladium added 15 cents to close at $374.15 an ounce while July platinum added $2.50 to close at $1,300.90 an ounce. July silver followed gold lower to finish at $13.37 an ounce, down 1.5%, or 20.5 cents."