Commodity prices change little but remain soft in European session. WTI crude oil continues trading below 77 while gold hovering around 1245. Market sentiment is weak and stock markets plunge amid disappointing earnings estimates by US companies. Stocks in Asia fell -1.5% with Japan's Nikkei Stock Average losing -1.92% and Taiwan's Taiex Index sliding -1.52%. In European morning, benchmark indices open lower by 0.5-0.6%.

Situation in Eurozone's sovereign crisis remains uncertain. EU finance ministers agreed last week to disclose results of bank stress test and the leaders have been discussing whether Spanish savings banks and Germany's state-owned regional Landesbanken should be included in the test. Moreover, there have discussions on whether to include the chance of a sovereign-debt default in the stress test scenario.

Natural gas declined -1.17% to 4.748 yesterday. While development of tropical storm in the Gulf might affect supply, gas price was pressured after inventory increased +81 bcf to 2624 bcf in the week ended June 18. According to the US Energy Department, around 10% of US gas output comes from federal waters in the Gulf. Production disruption in the Gulf would tighten demand/supply balance but given ample has storage, the impact should be limited for now.

G-20 leaders will meet tomorrow in Canada. While the People's Bank of China (PBOC) released a statement last week that China would increase flexibility of RMB, the US should urge China to give more details in the plan. According to the PBNO, 'recovery and upturn of the Chinese economy has become more solid with the enhanced economic stability. It is desirable to proceed further with reform of the RMB exchange rate regime and increase the RMB exchange rate flexibility'. Yesterday, Daokui Li, an advisor of People's Bank of China, RMB likely to rise about +3% against USD by the end of this year, assuming the euro stays around current levels against USD. US' urge of more aggressive RMB appreciation during the meeting should be indicative of trade tensions in the future and this affects gold's outlook.