Broker's Notes: Gold keeps rising, expected to reach $1430

Gold rose to a record high for the fourth straight session on Tuesday, as inflation worries and euro zone sovereign debt woes continue to lure investors to precious metals. Silver hit a new 30-year high just below $28, and palladium extended gains to a new nine-year peak of $712.75. Holdings in the world's largest gold-backed exchange traded fund, SPDR Gold Trust, gained 2.43 tonnes to 1,294.196 tonnes, their highest so far this month. Charts suggest that gold is expected to rise towards $1,430 per ounce.

Euro

The euro's losses deepened on Tuesday as resurfacing concerns about peripheral euro zone debt kept it under pressure, and as short-term players closed dollar short positions as they prepared for year-end book-closing. The euro dropped to its lowest in over a week against the dollar, falling to $1.3847 with potential seen for a slide to $1.3700, but then clawed back a bit as the yen rose suddenly on the dollar in a move dealers said appeared driven by order flow.

Australian dollar

The Australian dollar, which tends to suffer if risk appetite retreats, was steady on the day at $1.0133, having retreated from a 28-year peak around $1.0180 set last week. But it fell 0.4 percent against the yen to 81.88 yen. The market is also watching this week's meeting of G20 leaders in South Korea. The summit has been pitched as a chance for leaders of the countries that account for 85 percent of world output to prevent a currency row escalating into a rush to protectionism that could imperil the global recovery. But there is little sign of consensus and the meeting has been overshadowed by disagreements over the Fed's quantitative easing policy. The move has helped depress the dollar and raised fears it may cause a destabilising flow of money into emerging economies. 

Oil

Oil fell for the first session in seven as concern about euro zone debt provided support for the dollar, while forecasts indicated US crude stockpiles rose for the fifth time in six weeks. German September industrial output unexpectedly fell, adding to euro woes related to a political impasse ahead of a key Irish budget vote. The dollar rose 0.24 percent against a basket of currencies on Tuesday, bucking the prevailing trend since June. The Organization of the Petroleum Exporting Countries sees no need to boost its output when it meets next month, two officials from the group said on Monday, even though oil prices have rallied to a two-year high above $87 a barrel.

Indian rupee

The Indian rupee was held in a tight range on Tuesday as gains in domestic shares were offset by broad gains in the dollar versus other Asian currencies and major units. Local shares were trading up 0.4 percent due to foreign fund inflows after having opened marginally lower. Foreign funds have so far in 2010 bought shares worth a record $28.1 billion, in addition to last year's $17.5 billion. The rupee has gained 4.8 percent this year. Market participants said they were also watching for inflows towards Power Grid Corp of India's follow-on public offer. The world's third-largest power transmission company on Tuesday launches a share sale to raise up to $1.7 billion before it closes on Friday.

Sterling

Sterling rose to a five-week high against a broadly weaker euro on Monday as worries about euro zone debt dented the single currency, while the pound ceded ground against the dollar which was lifted on short covering. The euro was under pressure on mounting worries about Irish debt. The main opposition party said on Sunday it would not back next month's budget, sparking concerns whether it will be passed in the coming months. Markets believe that the pound was likely to be supported by a run of generally positive economic data, including unexpected rises in the UK manufacturing and services sectors. 

But most traders are likely to bide their time ahead of Wednesday's inflation report from the Bank

Source: Richcomm Global Services, DMCC, Dubai; www.richcommglobal.com