Good Morning,

Precious metals prices pulled back overnight following a mild gain in the US dollar (up to 73.60 on the index) and a bit of a retreat in crude oil (to just under $136) but the dip did not produce any noteworthy bargain hunting in Asian markets as seasonal consumption patterns provide little if any motivation for buyers. Gold remained within its recent range bouncing off the $885 level a couple of times but as yet unable to overcome $895 with conviction. Today may be the day to get above $900 once again, but we will need to see where the metal manages to close the session. As the decline in oil prices looks to be short-lived due to a fresh Nigerian sabotage attack bullion may turn higher as the day unfolds.

New York spot prices opened Thursday's session with a $4.00 loss at $889.60 amid small gains in the greenback following the decision of the Swiss National Bank to hold interest rates steady as a defensive move against inflationary pressures. Oil prices inched back above $136 on the Nigerian news and stock market bulls looked poised to attempt to defend the 12,000 mark on the Dow after the Nikkei lost 322 points overnight and following yesterday's FedEx and credit markets-induced 131 point decline.

Yesterday's posturing by the Bush administration as well as by its chosen successor focused on big talk about offshore oil drilling and the building of 100 nuclear power plants, but offered very little in the way of any immediate relief from soaring prices at the gas pump. Silver was off 11 cents at $17.22 while platinum reversed its Wednesday gains and headed $40 lower to $2043 with palladium following $2 down to $465 per ounce. The Philly Fed index numbers and initial jobless claims might provide the market-moving fuel for more active changes this morning.

Otherwise, most participants are basically mentally fast-forwarding to Wednesday of next week trying to gauge what the Fed will come up with. Thus far today, the jobless figures' indications of lower levels for both initial as well as continuing claims is not having a marked effect on trading as players are instead striking up water cooler talk about the FBI arrests of two former Bear Stearns fund managers over their alleged role in lighting the fuse of the subprime bomb.

This being an election year and all, politicians have not hesitated to jump into the ring, don their economist hats, and give us their opinions about everything from the subprime debacle to oil prices, and more. Some were seen on various interrogation panels at hearing designed to get to the core of these problems, while others have offered various proposals to deal with the effects of something that is already out of the bag. The latest such package of ideas comes from independent Connecticut senator Joe Lieberman. His focus? Excessive commodity speculation by big funds. His solution?

Our good friend Laura Mandaro over at Marketwatch brings you the latest:

The head of the Senate's government affairs committee [Mr. Lieberman] Wednesday unveiled a series of restrictive proposals aimed at financial speculators in commodities, including one that would place an outright ban on big pension funds buying agricultural and energy futures.

The three legislative ideas from Connecticut's Joe Lieberman, which the independent senator plans to discuss at a hearing June 24, count as the most drastic efforts yet from lawmakers targeting potential culprits behind high oil and grain prices.

The most severe would prohibit private and public pension funds with more than $500 million in assets from investing in agricultural and energy commodities traded on a U.S. futures exchange, foreign exchange or over the counter, according to materials provided by Lieberman's office.

A second plan would direct the Commodities Futures Trading Commission to establish total limits on the share of the commodity market held by financial investors.

A third proposal would direct the futures regulator to impose speculative-position limits on any stakes not related to real hedging activities, an action that could limit the commodities-swaps activities of big investment banks such as Goldman Sachs Group

We are not, as some continue to argue, witnessing the ebb and flow of natural market forces at work. We are instead seeing excessive market speculation at work and that is why our government must step in with new laws to protect our economy and our consumers, said Lieberman in a statement.

Lieberman will most likely introduce legislation with Sen. Susan Collins, R-Maine, after the July 4 holiday recess, said a staff representative of Lieberman. That legislation could incorporate some or all of these proposals, depending on feedback from witnesses at the hearing, as well as the public.

Investment banks and pension funds aren't waiting for that forum to make their anxiety about Lieberman's proposals known. A statement penned by six influential trade groups, including the Securities Industry and Financial Markets Association, the Financial Services Roundtable and the Investment Company Institute, warned that efforts to bar financial investors from commodities markets could substantially harm the ability of Americans to protect themselves against inflation.

Blaming speculation or any specific trading practice for rising or falling commodity and energy prices without real evidence of wrongdoing is misguided, said the statement. Those kinds of charges create the very real possibility that speculators will choose to abandon these markets and use their investment dollars elsewhere, and such an exodus threatens the healthy functioning of the markets, it said.

The CFTC, under pressure from Congress to show it is working to rein in excess speculation in commodities markets, said Tuesday that it was closing the London loophole by making London traders of the benchmark U.S. oil contract follow the same speculative-position limits as their U.S. counterparts.

Despite analysis from the futures watchdog that there's little correlation between high commodities prices and the recent wave of financial investing, many big users of energy and grain markets argue that supply and demand can't be the only reason for the commodities boom. They've called for more regulation of financial investments in commodities.

Some investors and exchanges, including the CME Group and the New York Mercantile Exchange, however, have warned that more restrictions could drive investors to overseas or less-regulated markets -- and could even inflate prices further.

Next week will tell more, as these ideas get to be aired at hearings in Washington. Surely, we will hear from more than just the senator on this topic. It is juicy enough, to say the least.

Look for continued firmness and stabs at getting out of the recent range. The latest potential bobmshell in geopolitical news: Iran studying plans to abandon uranium enrichment program...

Happy Trading.