Brokers' notes: Gold and oil continue to slip

Gold
Gold prices slipped on Tuesday to their lowest in nearly a week, caught up in selling of other assets such as equities, oil and the euro, as investors fretted over the outlook for the global economy. While these concerns are likely to support gold in the medium run, gold is being sold in the short term to cover losses on other markets. Gold hit a 1-1/2 month high at $1,237.15 an ounce last week as concerns over the global economic recovery fuelled interest in the metal as a haven from risk, but has since retreated. Assets in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, were unchanged at 1,299.47 metric tons yesterday, the company’s website showed. Holdings are 1.6 percent below June’s record of 1,320.44 tonnes.

Euro
The 16-nation euro was manhandled to multi-week lows on Tuesday as the loss of key technical support led speculators to short the currency in the hope of forcing stop-loss sales against both the yen and the dollar. Bears were targeting $1.2605, the 50 percent retracement of the euro's rise from a four-year low of $1.1876 in June to its August peak of $1.3334. A break here would open the way to at least $1.2522 and then $1.2479, daily lows from July. In the past few months, market players had overlooked problems in Europe, such as the sovereign debt crisis and the deteriorating health of some banks in the region, due to optimism that a steep fall in the euro earlier this year would help the euro zone economy through a boost in exports. But market players have shifted their focus back to the euro zone's troubles after tame economic data and unexpectedly dovish comments from a top European Central Bank official.

UK Sterling
UK Sterling dropped to a one month low against the dollar on Tuesday, stung by comments from Bank of England policymaker Martin Weale that Britain faces the risk of sliding into recession. The comment drove the pound down nearly 1 percent on the day against the dollar to $1.5373, its weakest since late June. The losses against the dollar also helped extend the sterling's loss against the euro, which rose more than half a percent to the day's high at 82.12 pence, and against the Japanese yen, hitting a three-month low of 129.52 yen.

Yen
The yen has hit a new 15-year high against the dollar amid continued uncertainty about whether the government will intervene. The strength of the yen is a major worry as it puts a strain on exporters. The dollar slid to 84.17 yen, the lowest since 1995 before recovering slightly to 84.47 yen. The yen is also at a nine-year high against the euro. The strong yen led to heavy losses for Japanese shares on Tuesday. The Nikkei index closed down 121.55 points, or 1.3%, to close below 9,000 points for the first time since May 2009.

Crude oil
Crude oil futures extended overnight losses on Tuesday, breaking below the $73-a-barrel mark as the US dollar strengthened against the euro amid mixed regional equities and worries over the pace of global economic recovery. Crude prices tend to fall on stronger US dollar as it makes oil more expensive for buyers in other currencies. Unlike last week, crude may be more volatile this week amid an array of economic releases that will focus on the housing industry during the next couple of sessions with the market shifting attention to durable goods, GDP and consumer confidence numbers toward the week's end. With renewed oil demand concerns in the US, especially for gasoline ahead of the end of the summer driving season, the market focus is on Department of Energy inventory data to be released tomorrow.