Gold dipped in line with other commodities

BY

Gold dipped in line with other commodities and the wider markets, with US equities seemingly headed for a softer opening and with
sentiment remaining flat following last Friday's sell-off in the precious
metals.

The euro is trading somewhat softer this morning and with the US
equity markets pointing towards a softer opening this is equally a
moderate negative for the flat gold price.

Softer oil prices and continued weakness in the base metals this morning is also weighing on sentiment towards the commodities,
analysts said, as is expected weakness on Wall Street this morning.

'The gold-to-stock markets correlation that has developed into a
tandem-trade pattern since February 27 appears to now play a
larger-than-expected role in the gold price equation,'  an
analyst said .

'More investors are taking parallel cues from historically
counter-cyclical assets to make their bullion investment decisions,'
he added.

Gold added almost 10 usd per ounce yesterday from Friday's close,
and is seen continuing to trade within a relatively narrow range,
supported by physical buying and taking direction from the dollar.

The metal fell to a three-month low of 643 usd at the end of last
week as concern mounted over rising inflation, with investors
becoming increasingly risk averse as global equity markets turned
lower and US bond yields pushed above 5.25 pct.

While it has now pulled back from those lows, the market is
continuing to eye US data later this week -- including retail sales
and industrial production -- for signs as to the health of the
world's largest economy.

BY

Gold fell, resuming its decline to a 12-week low in New York, on concern higher global interest rates will reduce demand for the precious metal as an alternative investment. Silver also dropped.

Gold tumbled 3.9 percent last week, the biggest weekly decline in
three months, after the European Central Bank and the Reserve
Bank of New Zealand raised rates. Holding gold becomes less
attractive when rates rise because the metal has no fixed returns.

U.S. Treasury yields rose today after China said prices increased at
the fastest pace in two years, renewing speculation rising global
inflation will prompt central banks to raise rates.

The yield on the 10-year bond rose 2 basis points to 5.19 percent
in New York.

The dollar rose to near a two-month high against the euro today
and has climbed for a fifth day, the longest winning run since
October, as traders pared bets the Federal Reserve will lower
borrowing costs this year.

JKL

thanks