Money and Metals

Reuters reports on currencies. "The dollar fell to a record low against the euro on Friday and was on track for its sixth straight weekly decline, weighed down by fears that losses in risky mortgage debt would hurt consumers and slow U.S. growth. The greenback also tumbled against the yen as investors unwound bets on risky assets such as stocks and emerging market debt."

"Defaults on subprime mortgages, made to borrowers with weak credit, and mounting losses on bonds backed by such debt have rattled financial markets and soured general dollar sentiment."

"St. Louis Federal Reserve Bank President William Poole emboldened dollar bears on Friday when he said losses in the non-prime mortgage market, which includes subprime, were large enough to affect home building and consumer spending."

"'It's just a story of general dollar weakness, and though nothing has really changed on housing, that's being used as a catalyst to sell,' said Dixon Fung, currency strategist at MG Financial in New York."

"Midafternoon, the dollar was trading at $1.3820, down 0.2 percent from late Thursday and near a record peak of $1.3844 hit earlier in the session."

"Sterling hit a 26-year high at $2.0587 before easing to $2.0552. The dollar index, which measures the greenback against a basket of major currencies hit a 12-year low."

"The dollar also fell to a six-week low at 120.87 yen before edging back to 121.05 yen, down 0.8 percent on the day."

"U.S. gold futures rallied to a two-month high in heavy trade Friday, capping a week of solid gains fueled by renewed fund buying and as investors sharply increased holdings of bullion held by gold exchange-traded funds (ETF)."

"Analysts said that gold was poised to retest the psychological $700 level in the near-term because of a combination of bullish factors including a weakening dollar, firm energy prices and improving jewelry demand."

"Most-active gold for August delivery on the COMEX division of the New York Mercantile Exchange was up $6.60, or 1 percent, at $684.70 an ounce, dealing between $675.80 and $687.60, which marked its loftiest level since May 10."

"Gold has attempted several times to break above the $700-level and retest the 26-year peak at $730 set in May 2006, but so far has failed this year."

"Joseph Guzzardi at Sabin Commodities said from the COMEX floor that the falling dollar and stronger energy prices had kept the precious metals market up most of this week. 'Some fund buying is coming back in here,' he said."

"COMEX estimated final volume at a busy 122,692 lots, and gold options at 13,447. Turnover at Chicago Board of Trade's electronic 100-oz gold futures was 27,329 lots at 2:21 p.m. EDT. Changes in gold and silver ETF holdings are closely watched by market participants because sharp inflows in gold ETFs could be a bullish signal as it shows longer-term retail investors are entering the market."

"At 2:37 p.m., spot gold was quoted at $682.90/683.70 an ounce, higher than $673.90/674.50 late Thursday. The London afternoon gold fix was $681.60."

"NYMEX October platinum closed up $8.10 at $1,346.60 an ounce. Spot platinum fetched $1,330/1,334 an ounce. September palladium inched up 80 cents to end at $374.75 an ounce. Spot palladium was quoted at $370/374 an ounce."

"COMEX September silver closed up 2.8 cents at $13.403 an ounce, trading between $13.300 and $13.500. Spot silver was quoted at $13.27/13.32 an ounce, compared with $13.24/28 late Thursday. London silver was fixed at $13.290."

"'I am cautious as recent gains have been made purely on a dollar weakness. The price movement is not artificial, but too much dependence on one factor is not healthy,' said Matthew Turner, precious metals analyst at Virtual Metals. 'Gold will be driven by the dollar, but if the currency doesn't move, then it might come back on profit taking.'"

"U.S. gold futures have rallied more than $35, or nearly 6 percent, since it closed at $650.60 on July 5."