Crude oil price extends gain above 70 in European morning as USD's retreats further against major currencies and stock markets rally. However, the benchmark contract may only add modestly, by around 1-2%, over the week due to the sharp fall earlier this week.

NNPC, Nigeria's state oil company said that the nation has already shut around 1.4M bpd of oil production out of its 1.67M bpd quota as MEND's attack has intensified. Managing director of the group said that crude supplies for refinery will finish in 15 days if the pipeline supplying crude to Kaduna is not repaired.

USD's decline accelerates after China reiterated its call for a new reserve currency. The People's Bank Of China said that there's a need to create a new currency which is independent of the economies of the issuers and IMF should manage part of members' foreign exchange reserves. The dollar index falls back below 80 while USD slides to 1.4086 against the euro, heading for the biggest weekly decline in a month.

While it's true that escalated attack from MEND in Nigeria and weakness in USD should continue to provide temporary support to the black gold, we doubt if it can overcome the 72 hurdle as fundamentals remain bleak

Surging to 945, gold for August delivery will likely record for the first gain in 4 weeks. In coming weeks, gold's performance will continue to be determining by USD as we see little progress in both physical and investment demand. Bullion holdings in SPDR Gold Trust dropped 5.5 metric tons to 1125.74 metric tons Thursday, the biggest decline since April 17.

After recording decline in gold imports in the first 5 months in India, representative from the Bombay Bullion Association estimated that import for the first 3 weeks in June probably amounted to just 8-10 metric tons, compared with 18 metric tons the same period in 2008.

Silver price climbs +1.6% higher to 14.23 after recapturing a close above 14-level Thursday. The PGM group rallied despite bad news from auto demand. The benchmark contract for platinum rises to 1205 after gaining +2% yesterday In Japan, Honda said that it's vehicle production dropped -38% yoy to 195K in May while Toyota, the world's biggest automaker, announced that the company's output plummeted -39% yoy to 443K during the month. Akio Toyoda, the new president of Toyota said that the company will face 2 more difficult years.

Partly supported platinum price was potential supply concerns in South Africa. Eskom Holdings, the state-run power supplier will raise power tariff by an average of +31.3% starting from July 1 until March 31, 2010. Industry survey showed that the hike may increase production costs of gold and platinum by almost 3%.