The spot gold market held steady above $653 during Asian trade on Friday, before slipping towards $650 per ounce as the London opening drew near.
In Tokyo the benchmark April '08 gold futures contract rose 0.4% against the Yen, but it held at the equivalent of $659 per ounce in Dollar terms.
The weakening Yen hit a fresh four-and-a-half year low of ¥123.04 to the Dollar, encouraging Tokyo funds to push Japanese export stocks higher, helping the Nikkei stock index close at a one-week high.
The big news for investors wanting to buy gold now remains yesterday's announcement from the Swiss National Bank that it will sell 250 tonnes of gold – one fifth of its remaining reserves – over the next two years.
Directorate member Thomas Jordan told reporters that, thanks to the rising gold price, gold's share in Switzerland's currency reserves had risen from 33% to 42% since mid-2005.
The sale will rebalance Switzerland's portfolio, said Jordan – a similarly practical reasoning to that given when the SNB sold 1,300 tonnes of gold between 1999 and 2005.
The planned sale, reckons John Bridges at J.P.Morgan, will equal around 6% of annual gold demand between now and 2009.
The sale may put "downward pressure" on gold and gold stocks, says Bridges. Put the announcement yesterday failed to dent Thursday's 0.4% rally – and heavy official gold sales only tend to harm the gold price when it's already in a confirmed downtrend. (Read more here...)
Even so, Matt Turner – an analyst at Virtual Metals, publishers of the highly respected Yellow Book – thinks it significant that the SNB bank cited re-balancing to 30% of reserves as the reason for selling a portion of its gold.
"Greece has 80% of its reserves by value in gold," Turner tells Resource Investors, "Portugal 79%, Italy 66%, Germany 63%, Netherlands 56% and France 56%. If these banks were to reduce their reserves to 30%, Germany would have to sell 1,802; Italy 1,341; France 1,273; Switzerland 394; Netherlands 311 and Portugal 235 tonnes."
In the oil market, meantime, crude prices continued to rise, hitting a fresh 9-month high above $67.64 at the Comex after a drop in US refining capacity.
"People understood that it was going to be a race for the refiners to keep up and now they're not even doing that," says Tobin Gorey, commodity strategist for Commonwealth Bank of Australia.
"That's pushed gasoline and crude higher," he goes on, pointing to the six-week low in US refining rates even as the summer driving season gathers pace.
US Treasury bond yields also continued to rise overnight, suggesting fears of inflationary pressures ahead despite a swift turnaround in comments from Chicago Fed president Michael Moskow.
After warming to the sell-off in long-dated bonds last Friday – the sell-off that took 10-year yields up to match short-term Fed rates – Moskow told yesterday's Wall Street Journal that US inflation is retreating "more rapidly than anticipated".
Thursday's Producer Price data contradicted that view. Today brings US Consumer Price inflation data at 08:30 New York time.
Wall Street forecasts a rise of 0.6% in May from April's 0.4% rate. Anything higher may push fresh investment Dollars back into gold.
"A lot of the short-term money has been taken off the table," reckons Jeremy East, head of metals trading at Standard Chartered Bank.
"A lot of funds have got out, but long-term holders are still there."