Although Monday's price gains were not relinquished in overnight Asian bullion trading, fresh gold buyers became a scarcer commodity as Tuesday dawned in North America. This, in part, because the US dollar also apparently refused to continue on Monday's path and slip much lower than the 78.90s on the trade-weighted index.

Small gains in crude oil (rising $0.74 to $64.72) provided a bit of (and about the only) a cushion of warm air under gold prices early this morning. The oil market is torn between earnings-driven economic recovery optimism plays, and the stark reality of surging gasoline supplies in the face of an anemic summer driving season.

Gold started the second session of the week with a small gain of $2 per ounce, quoted at $951.10 in New York. Participants were indicating a reluctance to let go of profitable positions, but at the same time not many exhibited the purchase enthusiasm that was seen in previous sessions. Gold remains capped in the upper reaches of the $950 area, and is starting to once again look like a nice little spec fund play within the broader channel.

A breakout to the upside cannot come to pass absent substantial investment inflows, and we do not see them on the current horizon. At the same time fabrication demand is fast turning from room temperature, to cold. Not the best ingredients for mega-rallies. Like we said a coupe of weeks ago, gold needs a fresh chapter in the crisis, and it needs it yesterday.

Silver dropped a penny on the open, to start the day at $13.62 an ounce. Platinum fell $3 and opened at $1178, while palladium lost $1 at $252 per ounce. Truck maker Volvo Group was looking at a difficult period ahead as it reported its worst quarterly loss ever. The wheels of commerce are still not rolling as smoothly or as actively as they should be.

Some of the difficulties still present in the recovery process were reflected in White House NEC Director Larry Summers' frustrated take the current behavior of banks as regards closure on foreclosures, and in his hesitation to characterize next year's pace of economic growth very precisely. The same cannot be said for the man who is not only not an advisor, but has his hands on the actual wheels of the world's largest economy.

Ben Bernanke came out slugging in an overnight piece he wrote for the Wall Street Journal. This, ahead of his actual testimony to Congress later this week. Let's call it pre-emptive jawboning, aimed at a larger than the C-Span-watching audience. The Fed head did not mince words when asserting his institution has the necessary tools to withdraw policy accommodations, when it becomes appropriate [emphasis ours] in a smooth and timely manner.

In so many words, 'not now, but for sure in the future.' Thus, any alarmist hard-money newsletter scribe who alleges that the Fed is behind the curve on this one too, and that it is exhibiting ostrich-like syndromes which spell hyper-inflationary doom, is being disingenuous with his readers. Let's wait for the spelling lesson to come from Mr. B.B. in a little while, and then we can quote the blueprint itself.

Happy Tuesday to All,