Currently trading at 75.7, the front-month WTI contract slides for the first time in 4 days on profit-taking. As we mentioned in the morning report, support from stronger-than-expected crude oil imports should be short-lived. Longer-term outlook should show that growth in domestic demand has been slowing down.

In other reports, the government announced that China's property prices rose +11.4% y/y in June, eased from +12.4% in May and a peak of +12.8% in April. Meanwhile, net new lending fell to RMB 603B, compared with RMB 639B in May. Credit growth slowed to 18.2% from 21.5% in May. Moderations in June's growth are the result of the government's tightening measures. While the pressure of inflation has eased given slowdown in property prices, we continue to expect the People's Bank of China to raise the benchmark interest rate in 3Q10.

Gold price is also a tad lower but remains above 1200. The yellow metal has been struggling for direction in recent weeks. Indeed speculative activities and ETF flows have moderated significantly since mid-May when everyone was eagerly parking their capitals in safe-haven assets. We expect recent choppy trading to continue in near-term and further downside is likely. According to our technical team, 1166 is an important support on further correction.

While we have observed buying interests as price drops below 1200, elevated price level tends to hurt jewelry demand which is the biggest contributor of total gold demand over the past decade. According the Indian Bullion Market Association, imports of gold by India, the world's biggest consumer, may plunge as much as -36%. In April and May, total India gold imports were around 50 metric tons. Given the fact that Indian gold jewelry demand represents around 30% of world gold jewelry, total jewelry demand would still be a short drop from 1Q10.

Regarding ETF investment, preliminary data shows that gold holdings have exceeded 200 metric tons in 2Q10, the second strongest quarter after 1Q09's 465.1 metric tons. The trend indicates possibility that ETF investment may overtake jewelry demand as the biggest contributor of total gold demand in 2Q10.