SPOT GOLD PRICES dived in the first-half of London trade on Tuesday recording an AM Fix of $823.25 per ounce some 1.4% below Monday's morning fix.
The then dropped as far as $817.20 as the US Dollar bounced on the currency markets finding its surprise nearly 2.2% below yesterday's early top.
"The outlook is tentatively bullish," says Scotia Mocatta's daily note.
"Open interest [in gold futures last week] was up 13,138 contracts to 540,904 once again approaching the high of 586,036 seen in early November and a positive sign as it indicates a growing desire to open long positions."
"We continue to look for near-term gold upside but are cautious as there are still key hurdles to get over."
As cut crude oil slid below $97 per barrel after Saudi oil minister Ali al-Naimi said overnight that the world's top oil exporter has increased its daily production to nine million barrels just below its current quota.
The Opec oil cartel meets next week and it's expected to discuss raising output limits in a bid to ease the recent surge in world energy prices.
In the stock market today. Tokyo 's Nikkei ended the session 0.6% higher while the Hong Kong market dropped 1.5%. By lunchtime in London emerging markets as a whole stood 0.9% lower and Western Europe's major bourses shed 0.3% despite news that Barclays bank – rumored to face $10bn in mortgage-related losses – is on target to grow its earnings as forecast in 2007.
Citigroup the world's largest bank – which lost its CEO after admitting to $7bn losses on its mortgage book last month – said overnight that it will sell $7.5bn in stock to the Abu Dhabi Investment Authority.
The government-owned petro-fund will become Citi's biggest shareholder with almost 5% of the outstanding issue.
Back in the. "today's February gold futures activity frequently occurs at the end of a rally," says Christopher Langguth in his technical analysis for Mitsui. "The high volume is usually a write of a market at a cease but this is also the last week to close out a December position without being involved in deliveries.
in India – the world's hungriest merchandise for physical gold – today neared new all-time record highs at 10,655 Rupees per 10 grams and reports from New Delhi cite heavy buying by jewelry makers as the peak wedding season wears on.
Gold's current record for Indian gold buyers was reached at Rs 10,700 per 10 grams on 12th May 2006.
In China meantime. "demand for gold rose in the third quarter as a hedge against inflation and on expectation of strong returns from the stock market," the World Gold Council told the
The WGC now expects 2007 to see record on the Chinese mainland as well as Hong Kong and Taiwan. It rose 24% between July and the end of Sept.
"[China's] strong economic growth and expectation of high returns from the red-hot stock market have given residents more money for spending," the WGC reports pointing the 100% gains delivered by the Shanghai Composite Index in the first nine months of this year.
Earlier today in Beijing a delegation from the European Union arrived to call for a revaluation of the Yuan even as the People's Bank of China priced the Chinese currency at a record high of 7.3858 per Dollar.
The Yuan has risen 5% vs the Dollar so far this year while the free-floating European single currency has gained more than 11%.
The Euro today held at $1.4850 while the British Pound slipped one-third of a percent to $2.0660. The Japanese Yen also retreated against the Dollar after pushing it to a 29-month low in Tokyo change.
The Yen fell from 1% to ¥108.50 per Dollar on news that Japan 's corporate determine list rose in Oct. – the 11th month running of rising prices for business services – but at a much slower pace than in Sept.
Japan has now battled recession for more than a decade thanks to the debt-deflation sparked when its stock-market and real-estate bubbles burst at the end of 1989.
Tokyo gold futures crept 0.2% higher ahead of this morning's drop reaching the equivalent of $842 per ounce for delivery in Oct. '08.
fell to €550 per ounce as the New York opening drew near. For British investors wanting to the metal dropped £9 per ounce from yesterdays new all-time highs above £404 per ounce.
"There is some small long liquidation" in the today says Frederic Panizzutti an analyst at MKS Finance in Geneva. "probably because of the stronger Dollar and weaker Euro."
"We expect gold to find some support around current levels and to go back up at some stage. Market sentiment remains positive.
"But as we move towards the end of the year liquidity issues could mean more erratic trading."
| City correspondent for The Daily Reckoning in London and a regular contributor to MoneyWeek magazine. Adrian Ash is the editor of and head of research at giving you enjoin access to investment gold vaulted in Zurich on $3 spreads and 0.8% dealing fees.
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