London 26/08/2011 - Gold came under pressure again Thursday, extending its three day down-streak as players reacted to the margin increase by the CME. But, despite touching a low of $1703 the metal firmed towards the end of the day, closing with a modest 0.4% gain as bargain hunters continued their dip buying; the precious metals complex finished up a net 1% as the bounce in gold lifted the industrial metals. In the base metals a mix of short covering and stimulus expectations led the metals to a net 1.6% gain by the close as copper reclaimed the $9,000/t mark while both lead and zinc posted gains of more than 2%. In wider markets despite the threat of disruptions by hurricane Irene WTI crude finished only slightly firmer, up 0.1%; US equities settled in negative territory with the Dow and S&P500 off 1.5% after a sharp downturn in European equity sentiment bought the three-day rally in US stocks to a sudden halt. As well as the gains in gold the dollar also gained ground amid safe-haven flows; the Dollar Index was up 0.3%, the euro closed down 0.2% against the dollar but up a similar amount versus the yen. Stock markets in Asia have seen a mixed session today although are holding onto gains into the close with the Nikkei up 0.3% and the MSCI Asia Pacific Index 0.7%. Overnight the Japanese Prime Minister Naoto Kan announced his resignation after mounting criticism over his alleged lack of leadership following the March 11th earthquake. The Australian Dollar is currently up 0.45% versus the greenback after comments from RBA Glenn Stevens on inflation prompted a reduction in speculation the RBA would cut interest rates. Meanwhile, Bank of England MPC member Martin Weale suggested the BOE would expand its asset purchase plan should the UK economy weaken “substantially”. The Dollar Index was down 0.4% at the time of writing. The economic agenda today includes Eurozone M3 Money Supply and Private Loan; UK Revised GDP and Business Investment, US Revised GDP and UoM Consumer Sentiment. However, the big focus today is Fed Chairman Bernanke’s address at around 3pm BST and expectations of new measured to kick-start the ailing US economy. The metal markets have seen a cautious and rather mixed start this morning; gold is currently up 0.7%, silver is off 0.9% with copper off a similar 0.5% having run into profit taking from Asian players’ overnight taking advantage of yesterday close above $9,000/t. Bernanke is likely to hold the key for overall market direction for potentially the next few months with even the hint of QE/stimulus likely to see players increase their risk exposure; the threat however is Bernanke will take a more dovish stance on the economy, disappointing markets and potentially sparking a deeper rout of equities and risk trades.

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