Crude oil edges higher in European morning as UAE central bank said that it 'stands behind' the country's banks, both local and foreign, in facing Dubai World's possible default. USD's retreat as risky assets recover also increases allure for commodity investments. Currently trading at 76.4, the benchmark contract continues to stabilize after plummeting to as low as 72.39 Friday.
Gold price, on the other hand fluctuates within a range of 1160 and 1185. While renewed weakness in the dollar should have boosted gold demand, investors tend to take profits after the yellow metal has rallied restlessly for several weeks.
Emerging news about gold is still encouraging. According to the China Gold Association, China may break records for both consumption and consumption this year as jewelry consumption advances and miners expand production as price surges to record highs. According to Zhang Yongtao, deputy secretary- general of the association, demand for gold may exceed 450 metric tons, compared with 395.6 metric tons in 2008, while output may rise to 310 metric tons, compared with 282 metric tons last year. China's gold production increased +9.5% on average in the past 8 years.
While many other Asian central banks have been aggressively accumulating gold, Chinese officials believed China should also increase the amount of gold it holds in reserves to reduce potential losses from a depreciating dollar. Ji Xiaonan, head of the supervisory committee at the state-owned Assets Supervision and Administration Commission, recommended China to 'increase its gold reserves to 6 000 metric tons within 3 to 5 years and possibly to 10 000 metric tons in 8 to 10 years'.
Stock markets also stabilize from Friday's sharp selloff. In Asia, the MSCI Asia Pacific Index gained +3.2%, the biggest gain in 7 months, as Dubai concern eases. Japan's Nikkei 225 Stock Average rose +2.9%, Australia's S&P/ASX 200 Index soared +2.8% and China's Shanghai Composite Index surged +3.2%.
In Europe, stocks fluctuate between gains and losses however. UK's FTSE 100 opened higher but gains were trimmed as RBS drops. Germany's DAX and France's CAC 40 slides 0.85 and -1.2% respectively.
The US market reopens after Thanksgiving holiday and is expected to weaken, as a catch-up of the broad-based decline last Friday.