Brokers' notes: Gold prices steady at $1,230; euro under pressure

Gold
Gold prices held steady near $1,230 an ounce on Monday as uncertainty over the outlook for the global economy continued to support investment in the precious metal as a safe store of value. The precious metal rallied to a 1-1/2 month high at $1,237.15 an ounce last week after a spate of lacklustre US data knocked confidence in the economic recovery, boosting interest in the metal as a haven from risk. Holdings of the world's largest gold-backed exchange-traded fund, New York's SPDR Gold Trust rose by nearly 13 tonnes last week, their biggest one-week rise since early June.

Euro
The euro was under pressure on Monday, hurt by concerns over the euro zone economy, which have seen short positions in the single currency extended, but managed to stay broadly flat against the dollar. Germany's composite index rose to 59.3 in August from 59.0, with a weaker reading in manufacturing offset by accelerating services activity. For the euro zone as a whole, the manufacturing PMI slipped to a six-month low of 55.0 from 56.7 in July. The services index dropped to 55.6 from 55.8 last month. These two data suggest that euro zone's economic recovery moderated only slightly in August and companies are more optimistic about the coming months despite a divergence in growth rates between countries, a survey showed on Monday. The numbers showed Europe's recovery for now is holding up better than that in the United States, and suggested a slowdown - expected on the back of swinging budget cuts and slacker global demand - may take longer to arrive.

UK sterling
The British sterling has gained support in recent days from some better UK data, including strong retail sales numbers on Thursday. Sentiment towards the pound remained shaky, however, with the latest data from the Commodity Futures Trading Commission showing speculators turned net short on sterling in the week to Aug. 17 after being marginally long the previous week. Speculators also sharply increased bets against the euro, however, suggesting more negative sentiment towards the single currency than towards the pound.

Oil
Oil futures are edging higher on Monday amid gains in European equity markets, although the move is subdued by the euro softening against the dollar. Crude benchmarks have recovered from the six-week lows seen Friday, but the market looks directionless on a quiet macroeconomic news day. An Atlantic tropical storm called Danielle could strengthen into a hurricane by Tuesday, warns National Hurricane Center, but the chances are slim that it will veer toward the oil-producing region of the Gulf of Mexico.

Indian Rupee
Indian rupee held in a tight range on Monday as mild gains in domestic shares and the dollar's losses versus majors was offset by concerns over sustained risk aversion in global markets. Rupee closed at 46.65/66 per dollar, slightly stronger than 46.67/68 at close on Friday. The unit traded in a narrow range of 46.56-46.6750. Equity markets too were little changed on Monday on lack of any major triggers but firm European markets and better monsoon prospects along with continued foreign fund inflows provided some support. Equity markets are watched for cues on capital flows. So far this year, foreign funds have bought shares worth a net $12.4 billion, in addition to last year's record $17.5 billion investment.

Source: Richcomm Global, Dubai, www.richcommglobal.com