Dubai: Gold traded firm on Monday morning as a weaker US dollar and worries about the health of the US economy spurred bargain-hunting. On Friday, data revealed that the US economy lost 131,000 jobs in July, boosting talk that the Federal Reserve could consider further easing in monetary policy as early as this week, a move that would strengthen gold's appeal as an alternative investment. The US dollar dipped against the yen on Monday, slipping towards a 15-year low, after the disappointing US July payrolls report. The employment report has sent two-year US Treasury yields to record lows, further hurting the dollar's yield appeal. The positive correlation between US and Japanese two-year yield spreads, which have been narrowing, and the dollar/yen rate has strengthened to its highest since the period just after the Lehman-shock two years ago. EURO The euro was steady at $1.3281 staying within sight of a three-month peak of $1.3334 struck on Friday. The general weakness in the dollar could keep the euro buoyant in the near term, but profit-taking on a rally in euro/dollar is expected to increase as the euro approaches the psychologically key 1.3500 level. That level almost coincides with the 50 per cent retracement of the single European currency's fall from a November peak of $1.5145 to a four-year trough of $1.1876 hit in June. RUPEE The Indian rupee edged higher on Monday aided by losses in the dollar but dollar demand from importers limited a further rise. Indian shares were trading up 0.3 per cent after a shaky start amid mixed Asian markets, with financials leading the rise. Shares are watched for directional cues on fund inflows. So far in 2010, foreigners have bought a net $11 billion (Dh40 billion) worth of shares, adding to last year's record $17.5 billion inflow. The index of the dollar against six majors was marginally lower. CRUDE US crude oil futures fell a third straight day on Friday, weighed down by a weak US jobs report that also pulled Wall Street lower. But crude prices managed to settle above $80 a barrel and a higher finish versus a week ago, as oil's losses were tempered by the dollar's broad slump and weakness against the euro. Data from the US Commodity Futures Trading Commission revealed that money managers increased net long crude oil positions on the NYMEX in the week through August 3, 2010. A low pressure system in the central Atlantic Ocean has a medium, 40 per cent, chance of strengthening into a tropical depression over the next 48 hours but is not likely to threaten the Gulf of Mexico.

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