New York (Platts)--22Oct2008

A firmer dollar and speculation over possible interest rate cuts in
Europe and the UK undermined gold and helped maintain the pressure on
non-commercial traders to liquidate long positions in New York trading
Wednesday.

Gold for December delivery, the active contract on the COMEX division of
the New York Mercantile Exchange, fell $24.10 to $743.90/oz on floor trade at
11:35 am EDT (15:35 GMT). On the more actively traded Globex electronic
platform, gold was trading at $745.30/oz at 12:38 pm EDT.

Gold fell below what many viewed as key support levels of $760 and $755
in London and quickly fell to $748/oz, traders noted. In New York, some
traders revised their support views to around the $740/oz level.

However, one trader said that if interest rate cuts go ahead in Europe
and the UK, that would strengthen the dollar and undermine gold further.
"There's talk of a Bank of England and a European Central Bank rate cut," said
a trader. "I don't think we're going to get another co-ordinated rate cut with
the Federal Reserve, the Bank of England and the ECB like we had earlier this
month, although it might be helpful if we did. I think the European rate cuts
will happen first, ahead of the next Fed interest rate move, which will
produce some short-term dollar strength and weaken gold."

However, traders said that the lower gold prices would encourage
increased physical buying support. "The physicals will definitely come in:
they already have but it's not been enough to stop gold falling.

The firmer dollar served to undermine the price of dollar-denominated
commodities across the board, with copper falling under $2/lb for the first
time in three years. The move lower was also fueled by widespread fears of
global, economic recession.

Silver followed gold down, with the active December contract down 44.50
cents to $9.63/oz at 12:41 pm EDT on floor trading.

Once again, PGMs trading was concentrated on Globex at the exclusion of
the floor and the active January platinum contract was off $32 to $859.70/oz
at 12:44 pm EDT. And palladium was down by $4.80 at $178.30 at 12:49 pm EDT.