Gold gave back a 1% rally in London on Wednesday, trading $20 per ounce below this time last week as crude oil managed only a slight bounce on news of an Iranian missile test.

Already subject to international sanctions over its nuclear research program, Tehran said today it successfully fired a Shahab-3 missile overnight, capable of reaching Israel.

Crude oil prices initially jumped 1.7% after losing more than $4 per barrel on Tuesday. Gold Prices rose to $925 per ounce.

Iran should "refrain from further missile tests if they truly seek to gain the trust of the world," said a White House spokesman today.

But "the bullish run [in Gold] which started mid-June is running out of steam," believes Phil Smith, writing in Mumbai for Reuters India.

"After such a steep rally a correction is likely."

Both Gold and oil slipped back as Wednesday's New York opening drew near, while European equity markets bounced 1% on average.

World equities remain more than one-fifth lower for 2008 to date, however.

"With fears about a global economic slowdown re-surfacing in financial markets," writes Manqoba Madinane for Standard Bank in Johannesburg, "this could put precious metal investment demand under more strain – given that commodity investment demand has been anchored by rising global inflation expectations."

Today's economic data pointed to yet further economic and inflationary pressures right across the developed world.

In Australia – where Macquarie Group is hoping to sell A$381 million of low-documentation mortgages on the securities market – investment lending fell almost 7% in May from April.

Last month in Japan, machine tool orders fell sharply, down 2.7% against the 1.4% growth forecast by Tokyo analysts.

Here in the UK, shelf prices in retail stores rose 2.5% year-on-year, meantime, led by a 7% jump in food.

"The sustained underlying strength of Monetary and Credit Expansion in the Euro area over the past few years has created upside risks to price stability," said Jean-Claude Trichet, head of the European Central Bank (ECB) in his monthly testimony to the European Parliament today – currently convened in Strasbourg, some 280 miles from its other home in Brussels.

"Over recent quarters, these risks appear to have become manifest as inflation has trended upwards," Trichet went on, attempting to defend last Thursday's decision to raise ECB interest rates for the first time in 13 months.

Last weekend the Spanish prime minister, Jose Luis Rodriguez Zapatero, said "more prudence is advisable" in ECB policy. Economists from Bank of America to Madrid's Circulo de Empresarios now forecast a Spanish recession in the second-half of 2008.

"There are too many headwinds for the Eurozone economy," believes Martin van Vliet at ING in Amsterdam. "We're seeing signs of the German export machine starting to splinter."

Germany's trade surplus shrank in May and France's deficit in goods yawned to a new record as the surging price of Euro-denominated goods cut exports on the world market.

The UK trade balance worsened yet again, meantime, reaching minus £4.2 billion ($8.3bn) in May as the surplus on services sold overseas fell by 8%. In physical goods, the volume of imports outweighed exports by £7.5 billion ($14.7bn) – more than 7% of the entire UK economy.

Ahead of Thursday's interest-rate decision from the Bank of England, however, the British Pound held steady on the forex market.

The Gold Price in Pounds Sterling slipped into the lower end of this week's range, trading at £466 per ounce by lunchtime in London.

The FTSE100 index of Britain's leading equities bounced, meantime, regaining 63 of the 567 points it's lost over the last five weeks and adding 1.1% to 5,501.

Meantime in the Gold Mining sector, Newcrest Mining – Australia's No.1 independent gold miner – admitted it spent 11% more than anticipated on closing it "hedge book" last month.

Newcrest followed fellow Aussie miner Lihir in buying back of forward sales of gold made during the gold bear market of the late 1990s and beyond.

The Gold Price has risen by more than 140% since then against the Australian Dollar.

Across in Central Africa, Banro Corp.'s latest feasibility study from the open-cast Twangiza project in the Democratic Republic of Congo (DRC) shows that moving into production will cost US$200 million more than expected.

CEO Mike Prinsloo reports that the $581m project contains more than 3.7 million ounces of measured and indicated gold resources – "impressive in an industry aching for new, well-sized gold projects," as Tim Wood notes at Resource Investor.

Looking to raise the necessary funds later this year, Banro would expect Twangiza to reach production sometime in 2011. The extra costs would be driven by the need for a hydro-electric plant to supply power – a major infrastructure expense now starting to hit gold miners in South Africa, formerly the world's No.1 gold-mining nation.

Global gold mining output has ticked lower throughout this decade, despite the surging Gold Price, as a lack of investment during the 20-year bear market – plus a shortage of new discoveries coupled with concerted green lobby campaigning – crimps new development.

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