"COMMODITY PRICES ARE FIRMER as the US dollar is weaker, and all things being equal that is how the world works. However, the strength is itself gaining strength, for the movements higher in N. American and European dealing yesterday were modest at best, while the movements since then have been a bit more enthusiastic” in light of the US$’s weakness. Turning firstly to gold, however, the gold bulls are waxing enthusiastic this morning for $905- $908 has held once again, and we shall admit that is of course quite true. One cannot argue with the facts of price.

$905 has indeed held, but we have our doubts as to its ability to hold for longer, for the rally from those lows has taken gold back into what is now likely to be over-head resistance that is abundant between $922-$937. We apologise for this rather wide range, but that is simply the fact of the matter, with real resistance not evident until the $925-$928 level. That, we think, shall prove formidable.

Like equities, we will tell gold traders to keep a very, very close watch upon the Yen/EUR cross, for as equities rise and fall with the cross, so too does gold. As we write, the Yen/EUR cross had traded up to 130.70, and it is now trading back down toward 129.90, suggesting that gold will meet selling pressure too."

(rec'd via Email from a DG sub)