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Gold steadied above US$950oz yesterday but was off the previous day’s 6-½ week high as caution returned after prices neared US$960. Gold has mostly moved in a range of US$945/960 oz for the past week with strong technical resistance towards the US$960 oz level, which was last touched on June 11.

Gains have also been capped by weak physical demand. High prices, combined with the fact that it is a slow season for gold demand, have forced jewelers in India, the world’s largest consumer of the metal, to step back to the sidelines. Gold XAU was US$955.20 oz at 0619 GMT, up 0.3% from the notional close in New York of US$952.65. It rose to a 6-1/2-week high of US$958.70 on Monday. U.S. gold futures for August delivery GCQ9 were $955.50 an ounce, up 0.2%

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Crude Oil hit an eight-month high last Wednesday before reversing as investor sentiment waffled in the face of negative economic data from the US. Volatility in the energy markets defied predictions for a docile trading week cut short by US Independence Day, with Crude breaching US$73bbl during Asian trading before stumbling back below US$70. Weaker-than-forecast US consumer confidence data and the US$ rising against the Euro were seen by some as prompting the later falls, while others argued that the unusually high trading volumes overnight in Asia were evidence that large investment funds had been changing their Crude Oil positions for the end of the quarter, causing a temporary price rise. Nevertheless, Crude Oil registered its largest quarterly gain since 1990. Barclays Capital argued that the surge in energy, metals and agricultural products that has pushed the Reuters / Jefferies CRB commodities index up 25% since the start of March marked a “revolution” in how investors view the commodities cycle. “The usual relationships between commodities prices and the economic cycle [have] been redefined,” Barclays Capital said in its summer 2009 outlook.

Popularity: 3% [?]

US consumer spending in May rose for the first time since February, and savings hit a record high as federal stimulus measures boosted incomes, bolstering the view that the economy was close to emerging from recession. US consumer sentiment also edged higher this month to its strongest since February 2008. Consumer spending, which accounts for more than 70% of US economic activity, rose 0.3% in May, the Commerce Department said last Friday. The department also revised up April’s figure to un-changed from a small decline previously. Personal income jumped 1.4% last month, propped up by social benefit payments from the government’s massive economic stimulus. The US$ extended losses vs. the Euro as the data reduced safe haven demand for the “Greenback”.

Popularity: 2% [?]

Fixed mortgage rates in the USA fell to a record low for the second consecutive week, signaling that Federal Reserve Chairman Ben Bernanke’s effort to spur the housing market is gaining traction. The 30-year rate dropped to 4.78% from 4.85% a week prior, the lowest since records began in 1971, Freddie Mac said today in a statement. Rates are falling to historic lows as the Federal Reserve ramps up purchases of mortgage-backed bonds to support home lending. Mortgage applications in the U.S. rose for a fourth consecutive week as a decline in borrowing costs prompted more refinancing. “Lower rates will help increase demand for homes,” said Celia Chen senior director at Moody’s Economy.com in West Chester, Pennsylvania. “We need to see stronger demand for homes to help end the housing correction.” The Fed’s efforts to expand lending “should make new consumer, business, and mortgage loans more available, at lower cost,” Bernanke said in a March 20 speech to a Phoenix banking conference.

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Over the weekend US President Obama ordered the US Treasury on Saturday to implement tax cuts for 95% of Americans, fulfilling a campaign pledge he hopes will help jolt the economy out of recession. The tax cuts are part of a US $787B economic recovery plan passed by the Congress. The aim is to put more money in the pockets of Americans and stimulate the economy by increasing consumer spending.”I’m pleased to announce that this morning the Treasury Department began directing employers to reduce the amount of taxes withheld from paychecks, meaning that by April 1st , a typical family will begin taking home at least US$65 more every month,” Obama said in his radio address.

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The Chinese economy is forecast to grow by more than 9 % this year, according to an annual blue paper released by the Chinese Academy of Social Science last week. Despite the huge uncertainty in 2009, China could still achieve a 9% growth as long as it unveils timely and suitable macro-economic control measures to boost domestic demand, said the blue paper. Economic growth slowed to 9 %in the Q-3 from 10.4 %in the first half and 11.9 % in 2008. Economic data for October and November showed further downside risks. Amid rising worries over an economic slump, China unveiled a 4 trillion Yuan (US$581B) stimulus package on Nov. 9 to boost domestic demand. It has also cut the lending rate by 1.08% pts as of Nov. 27, the largest reduction in 11 years and the fourth cut since mid September 2008

The government think tank also said the consumer inflation could be below 5 percent next year. The agency called to tap domestic demand potential and improve foreign trade polices to help exporters through the hard times. It also urged to grasp the opportunity of slumping oil prices to reform the pricing mechanism of energy. China’s producer prices tumbled by the most in almost seven years and inflation cooled to the weakest pace since 2006 as the government struggled to revive growth in the world’s third-biggest economy. Consumer prices rose 1 percent in January from a year earlier, the statistics bureau said today, after gaining 1.2 percent in December. Producer prices fell 3.3 % after a 1.1 % decline. Lunar New Year celebrations last month may have contributed.

Popularity: 8% [?]