Broker's Notes: Gold rises half a per cent; oil goes past $82

Gold
Gold gained half a per cent on Wednesday, supported by the weakness in the dollar, after minutes of a Federal Reserve meeting showed monetary easing might be needed soon, while palladium rose to its highest level in a week. Bullion has been trading in a narrow range of less than $20 this week, and is seen to be consolidating after a record-breaking rally took gold to an all-time high of $1,364.6 last week. Bullish sentiment is intact. Physical demand remains strong, and scrap selling is scarce, as market players bet on a further rally in prices. The platinum-palladium ratio, or the number of ounces of palladium used to buy an ounce of platinum, fell to 2.87, its lowest in more than seven years.

US Dollar
US Federal Reserve officials believed in September the struggling recovery might soon need more help, and they discussed several ways to provide support, including the possible adoption of a price-level target. The dollar paused its rebound and edged lower against a basket of currencies on Wednesday.

Euro
The euro looked set for a challenge of $1.40, with eyes on its eight-month high at $1.4030, after Federal Reserve minutes the day before reinforced expectations of more quantitative easing. But markets were cautious that up trends against the dollar, which revisited a record low against the Swiss franc, were becoming stretched and the time for consolidation could be near. Hawkish comments from European Central Bank Governing Council member Axel Weber on Tuesday, which highlighted the difference in direction between Fed and ECB policy, gave the euro added lift, with talk of a big stop-loss buy order just below $1.40. But traders cautioned that euro zone policymakers were likely to be increasingly unhappy if the euro rose above $1.40.

Sterling
Sterling fell to a one-week low against the dollar and lost ground on the euro on Tuesday after a Bank of England policymaker said the central bank may opt to use quantitative easing in the future. Monetary Policy Committee member David Miles said QE "remains a potentially powerful tool and one that we might come to use". His comment comes just a few weeks after fellow BOE policymaker Adam Posen advocated further quantitative easing. Concerns about Britain's economic recovery have raised the possibility the central bank may have to pump more money into the economy to shore up growth, but data on Tuesday highlighted the opposing forces BoE policymakers faced.

Indian rupee
The Indian rupee dipped to a one-week low on Tuesday as losses in domestic shares and the euro weighed, but hopes for capital inflows stayed firm ahead of the Coal India share sale later this month. Shares fell 0.7 per cent on Tuesday, weighed down by disappointing factory output data and but all eyes were now on corporate earnings parade that starts this week. India's annual industrial output growth dropped to single-digits in August, raising doubts about the economy's strength and the need for the central bank to increase rates again in November. Markets will now watch the inflation data due around noon (0630 GMT) on Friday for clues on the central bank's policy direction at its review on Nov. 2.

Oil
Oil rose past $82 on Wednesday after China's crude imports jumped last month, while a weaker dollar and expectations of economic stimulus by top consumer the United States burnished the appeal of commodities for investors. China's September crude oil imports rose 35 per cent from a year earlier to a record 5.67 million barrels per day, customs data showed on Wednesday, indicating demand from the world's second-largest consumer is surging. Oil ministers arriving in Vienna for OPEC's meeting on Thursday, the first in seven months, signalled the producer group would keep output targets steady. Saudi Arabia's Ali Al Naimi on Monday said the oil market was "well balanced.

Source: Richcomm Global Services DMCC, Dubai