Gold Investments Market Update

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Gold was down some 1.1% or $11.10 to $975.00 per ounce in trading in New York yesterday and silver was down some 2.3% or 49 cents to $20.13 per ounce. In Asian trading gold rose to $984.75 but has sold off slightly in early European trading. The London AM Gold Fix at 1030 GMT this morning was at $978.50, 486.14 and "635.18.

While gold is overbought technically in the short term and due a correction, any correction is likely to again be short and shallow as the fundamentals supporting gold remain extremely sound. With stock markets internationally under pressure after more poor economic data in the U.S. yesterday ( home foreclosures in the fourth quarter reached new record highs), gold"s safe haven attributes should mean that it remains well bid and should challenge the psychological level of $1,000 in the coming weeks.

Record high oil prices and the continuing fall in the value of the dollar (see FX Commentary below) and a general increase in macroeconomic and indeed systemic risk is rightly leading to risk aversion and a flight to quality.

All eyes will be firmly fixed on the February non-farm payrolls report due this afternoon. Should they confirm the markets' worst fears (a fall of some 110,000) then we will we see more of the same in financial markets - selling off of risky paper assets and a flight to the quality of sounder paper assets currencies and hard assets.

Stocks in the financial sector internationally have sold off and the immediate catalyst may have been a new blow with news of a default at Thornburg Mortgage Inc.. Thornburg is the second-largest independent mortgage lender in the United States and is primarily a "jumbo" mortgage lender, and not a subprime lender. This is a clear indication that the credit crunch is deepening and now affecting far more than simply subprime mortgages.