Broker's Notes: Gold and oil holds steady

Gold
Gold was steady on Friday, pausing from a record-breaking rally on a stronger dollar, and as investors await US economic data and a speech from Federal Reserve Chairman Ben Bernanke for cues on monetary policy. A fresh batch of US economic data, including inflation and retail sales, is due later in the day, after worse-than-expected weekly jobless claims numbers on Thursday helped propel gold to a new record high of $1,387.10. Purchases from China has kept premium for gold bars steady at 70 cents to spot London prices in Hong Kong, as Chinese investors, who are put off by volatile stock market and the government's move to curb speculation on property, are lured to gold. Technically gold is likely to retrace to $1,365 an ounce before moving higher towards the target of $1,404 early next week.

US dollar
The dollar edged higher on Friday, pulling away from a 10-month low hit against a basket of currencies the previous day as investors trimmed short positions in the greenback following its recent slide. A trend of dollar weakness was seen as likely to persist on the back of market expectations for the Federal Reserve to unveil additional quantitative easing next month. The dollar index edged up 0.1 percent to 76.697 up from a 10-month low of 76.259 hit the previous day. One downside target is near 76.00, roughly where the trend line drawn through lows struck in July 2008 and November 2009 now lies. After that the November 2009 low lies at 74.17.

Euro
The euro fell 0.3 percent to $1.4038 retreating from an eight-month peak of $1.4123. The euro is hovering near resistance on weekly Ichimoku charts at $1.4055, and a clear break above that level would be a bullish signal. One possible upside target is $1.4374, the 76.4 percent retracement of the euro's slide from its November 2009 peak down to a trough hit in June 2010. Data released last week by the U.S. Commodity Futures Trading Commission showed that the value of the dollar's net short position rose to $30.5 billion in the week ended Oct. 5, the largest bet against the dollar since at least June 2008.

Japanese yen
Japanese Finance Minister Yoshihiko Noda said on Friday that Japan will continue to take decisive steps on currencies if necessary to curb excessive moves in the foreign exchange market. He said, in response to a question, that Japan would take necessary steps regardless of meetings of Group of Seven or G20 nations. Group of 20 finance ministers meet in South Korea later in October, which will be followed by a G20 summit next month.

Oil
Oil was steady on Friday, heading for a third straight weekly close above $80, as hopes for economic stimulus ahead of a speech by Fed chief Ben Bernanke countered soft demand in top consumer the United States. Thursday's drop in the dollar to 2010 lows kept commodities among investors' top picks, briefly sending oil above $84, before government data showed U.S. gasoline consumption fell 1.1 percent in the past four weeks from a year ago, while total oil demand rose just 0.8 percent. Oil prices broke out of this year's predominant $70 to $80 range last month as traders anticipated a fresh round of U.S. Federal Reserve monetary easing that would boost growth prospects and cut unemployment, but are now stalling around $80 to $85 as the market weighs immediate economic conditions against future policy moves.

Source: Richcomm Global Services, DMCC, Dubai