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Gold futures dipped on Wednesday as weaker equities prompted funds to consolidate recent profits, but the market drew support from a renewed appetite for risk among investors. Platinum and palladium, boosted this week by strong July car sales, rose on supply worries because of a possible strike at the power utility in top platinum producer South Africa. Renewed interest from investment funds buoyed commodities and equities alike, as investors focused on economic recovery rather than deflation which had decreased inflation-hedge buying in Gold earlier this year. US December gold futures settled down US$3.40 at US$966.30 oz on the COMEX division of the New York Mercantile Exchange. Spot Gold dipped to US$966.20 an ounce at 3:30 p.m. EDT from US$966.75 oz late in New York on Tuesday.

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Bank of America joined the crowd of financial institutions reporting good earnings last week. The Charlotte, N.C., bank beat the expectations of analysts by saying today that it had a US$2.42B Q-2 profit after the payment of preferred dividends. Bank of America has struggled through the acquisitions of lender Countrywide Financial Corp. and investment bank Merrill Lynch & Co., and looks like it is getting its financial house in order. After rising in early trading, Bank of America shares fell 35 cents to $12.82 in mid-day trading. The second-quarter profit amounted to 33c per share and compared with a profit US$3.22B, or 72c, a year earlier. Although the numbers were below last year’s, the earnings still beat the forecasts of analysts surveyed by Thomson Reuters, who predicted the bank would come in at 28c per share.

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Rio Tinto dumped plans for a landmark investment from China last Friday, opting instead to raise US$21B through a rights issue and a joint venture with one-time suitor BHP Billiton. Rio’s US$19.5B deal with Chinese metals group Chinalco was put together in February at the height of the financial crisis in a bid to halve Rio’s US$38B debt. Its collapse last Friday under shareholder pressure left China, the world’s biggest steel-making nation, vulnerable to just two suppliers, the Rio/BHP combination and Brazil’s Vale, controlling 70% of global iron ore trade. “This is a big slap in the face for China,” said Paul Bartholomew at Steel Business Briefing in Shanghai “Rio has effectively been talking to BHP behind Chinalco’s back and Chinalco is entitled to feel like a two-timed lover this morning,” he said. Rio is to pay Chinalco a US$195MM break-up fee.

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The S&P 500, since sinking to a 12- year low of 676.53 on March 9 surged 25% as banks from Citigroup Inc. to JP Morgan Chase said they made money in the first two months of 2009 and Treasury Secretary Timothy Geithner announced plans to finance as much as US$1T in purchases of distressed assets from financial firms.

“No matter how you feel about the stimulus package, some of it is going to stick and the economy should stabilize in the second or third quarter,” said Bruce Bittles the Nashville- based chief investment strategist at Robert W. Baird & Co.“If that’s going to happen, the market will sniff it out.”

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A visiting Chinese business delegation sealed deals amounting to 2 billion U.S. dollars with British firms in London on Friday afternoon in a significant move to stave off protectionism in the wake of the global financial crisis. The agreement between Hainan Airlines Co. Ltd and Rolls-Royce Plc was the largest deal totaling 1.2 billion dollars.

Rolls-Royce is to provide 20 engines for the Airbus 330 of the Hong Kong fleet, in addition to a 15-year service support. The 11 procurement deals and agreements covered areas ranging from textile, metal services, airplane and automobile parts, pharmaceutical, new materials, eco-town building, and motion picture production.

Chen Deming, China’s commerce minister who led a 150-strong delegation of government officials and entrepreneurs, said at a China-UK business symposium on trade and economic cooperation that the trip is aimed at boosting bilateral business confidence amid the current economic downturn. According the Chen, trade between China and Britain dropped 2.6 percent in January this year, a clear sign of the global economic recession.

However, he believed that Chinese businesses would like to take advantage of the British strength in research and development, high technology, even retail and textile to find ways for collaboration. “This is just a beginning of our trade ties this year. A further group of Chinese businesses will come to Britain in a week’s time to explore trade and investment opportunities,” said the minister.

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The U.S. economy shrank in the Y 2008 Q-4 at its fastest rate since 1982 after a massive decline in inventories held by companies, according to official figures released on Friday.

Economists said that given bleak near-term prospects for consumption and investment, the US faced its worst economic downturn since the second world war, with even the US$787B stimulus plan signed by President Barack Obama earlier this month promising little immediate relief. “Finally the GDP data have caught up to the severity of the recession and, unfortunately, we expect the first quarter report to show similar weakness to the fourth quarter,” wrote an economist.

Updated data showed US gross domestic product contracting at an annualized rate of 6.2% in Y 2008 Q-4, below both the first estimate of a 3.8% c fall and economists’ predictions of a revision to a 5.4% decline. The biggest reason for the contraction was a revision to inventories, which are estimated to have fallen by US$19.9B rather than up by US $6.2B, shaving 1.1% points off the final figure.

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