Courtesy of Thompson Financial:

 
LONDON - Gold firmed in early trade after the US dollar weakened overnight following comments from Federal Reserve chairman Ben Bernanke that suggested a further cut in US interest rates could be in the offing.

The greenback softened further against the euro this morning after the release of euro zone trade data, further boosting the precious metal's appeal as an alternative investment.

 
A softer dollar also makes gold, which is denominated in the US currency, cheaper for holders of other currencies.

 
The dollar initially edged down yesterday after Bernanke told the US Senate that there were significant risks that the economic slowdown could deepen.

 
In his testimony, Bernanke said the Fed is prepared if necessary to "act in a timely manner as needed to support growth and provide adequate insurance against downside risks";, though he was more optimistic that growth would pick up later in the year, suggesting the Fed is open to further interest rate cuts.

 
"While the markets already priced in further Fed rate cuts, signs that they actually would deliver are weighing again on the US dollar," said Dresdner Kleinwort consultant Peter Fertig.

 
At 10.23 am, spot gold was trading at 911.05 usd an ounce against 907.30 usd in late New York trade yesterday.

 
Platinum meanwhile held above 2,000 usd as investors bought into the metal on fears the power shortage in major producer South Africa, which sent the metal to a record high yesterday, could cause further disruptions to supply.

 
The white metal hit a new high of 2,034 usd an ounce yesterday after South African state power company Eskom said it would be operating at only 90 pct of capacity until 2012.

 
Eskom also offered to buy back electricity from smelters, according to reports, fuelling fears the crisis could prove more protracted than initially thought.

 
"Platinum retains its strong upside potential as there is no clear indication of a resolution, at least in the near future, to the power crisis in South Africa," said Standard Bank analyst Walter de Wet.

 
Spot platinum was trading at 2,015 usd an ounce against 2,002 usd in late New York trade yesterday.

 
Among other precious metals, palladium was steady at 433 usd against 435 usd an ounce. The metal has not managed to benefit in the same way from the South African supply disruptions as its sister metal platinum, as the republic is not such a key source of supply.

 
Only 35 pct of the world's palladium is sourced in South Africa, against almost 80 pct of global platinum output.

 
Meanwhile silver rose to 17.35 usd from 17.23 usd.