Gold opens Monday just shy of $656; "fresh funds flowing in"

Spot gold prices opened Monday in London just shy of Friday's close at $656 per ounce – more than $4 higher from last week's start against the US Dollar.

"Fresh funds are flowing into gold as we're in the early part of the third quarter, although the market is still nervous because of uncertainty over the outlook for global interest rates," said Shuji Sugata at Mitsubishi Futures and Securities to Reuters earlier.

"We've seen solid demand at around $640 by Asian buyers, but the gold market is seeing some technical resistance around $660."

Tocom gold futures for April '08 rose 0.9% against the Japanese Yen in Tokyo today, ending the session equal to $655 per ounce.

Japan's Nikkei 225 stock-market index rose 0.7% to its highest close in 7 years. The Yen dropped to a fresh record low versus the Euro and a 15-year low against Sterling.

The US Dollar slipped, meantime, dropping to $2.0133 per Pound and holding at worse than $1.3620 per Euro. That capped the Sterling price of gold for British investors wanting to buy gold today at £325.50 as London began trading.

For French, Italian and German investors, the gold price in Euros opened the week just above €481 per ounce.

"The move of currencies continues to set the trend for gold," reckons Sugata at Mitsubishi. "Also the recent strength in oil prices should be positive but gains are pretty much limited so far."

Brent crude oil traded in London dipped this morning from an 11-month high above $75 per barrel. Reuters says that concerns about US fuel inventories, the safety of oil workers in Nigeria, as well as much-needed maintenance in the North Sea persist.

"Crude oil remains at a high level and the Dollar's weakness may continue," says Daniel Or, a precious metals trader for Scotia Mocatta in Hong Kong.

"We saw some limited amount of funds buying gold, plus physical gold buying at the dips now, so gold might go up to $660-$662 initially."

The most recent Bloomberg survey of gold-market professionals says that 16 out of 31 experts interviewed late last week advised buying gold. Eleven said to sell, and the remaining four were neutral.

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