'All the participating leaders showed an interest in changing their hard currency reserves to a credible hard currency,' Iranian President Mahmoud Ahmadinejad was quoted as saying. It is assumed he was talking about euro or yen, however the only truly 'hard' currency is gold and it is likely that Ahmadinejad is aware of this.

Russell Jones, head of currency strategy at RBC, said: “Any respite in the dollar’s weakness is likely to be temporary. The dollar isn’t a safe haven at the moment, because most of the problems facing the world economy are coming out of the U.S.” Ashraf Laidi, currency strategist at CMC Markets, said “the power in influencing the fate of the dollar lies increasingly with the oil producers as they struggle with a falling dollar.”

So far, the drop in the value of the dollar has been orderly. But that too may not continue. Stephen Roach again warned of a more sharp correction in the dollar. "The risk of a disorderly correction in the dollar is growing," Stephen Roach, chairman of Morgan Stanley Asia told a private equity conference in Hong Kong. "We hear a lot of talk about dismantling dollar pegs as long as the subprime crisis continues to unfold."

Further technical damage was done to gold yesterday. Yesterday's lows at $773 are now support but we continue to believe that gold is unlikely to fall below $750 per ounce given the clear and present global macroeconomic and systemic risk. Not too mention the simple and incontrovertible fact that the supply of gold cannot keep up with demand (there is rising demand internationally and gold production is falling in nearly all countries internationally, and production in the world's largest producer South Africa has fallen to its lowest level since 1932).

Forex and Gold
The dollar has again fallen very sharply and reached a new record low against the euro at 1.4797 (from 1.462) but has strengthened further against GBP at 2.0635 (from 2.05). Credit market worries particularly in the UK and U.S., falling equity prices and concerns about an increasingly likely U.S. recession remain fundamental. Financial stocks were again under pressure and caution about the financial sector was reinforced after a broker downgrade of Citigroup.

Finfacts.com in its daily market report points out that "The U.S. dollar is down 9.9% against the euro in 2007; 16.5% against the Canadian dollar; 18.3% against the Brazilian real; 6.8% against the Japanese yen and 4.9% against the China's yuan/renminbi."

Silver
Silver is trading at $14.40/42 at 1130 GMT.

PGMs
Platinum was trading at $1454/1459 (1130 GMT). Platinum has remained well supported and shown strength due to the large supply and demand imbalance.
Spot palladium was trading at $360/365 an ounce (1130 GMT).

Oil
Oil prices have continued to creep towards the $100 per barrel level after OPEC's decision not to increase production. At 1000 GMT, London's Brent crude for January delivery was trading up 1.00 USD at 93.28 USD/bbl. Meanwhile, New York WTI crude for January delivery was up 99 cents at 95.63 USD/bbl.

OPEC leaders believe it is the weak dollar that is driving up oil prices, rather than production. Iran, the market's fourth biggest producer, had argued the case for no longer pricing oil in dollars, but this point did not feature on the summit's final statement. As for the world's biggest consumer of oil, the U.S. was given a warning by the Venezuelan and Iranian leaders. They suggested they could use oil supply as a weapon if the US. had any ideas about using force against Iran and its alleged nuclear weapons programme. "If America decides on any action against us, we'll know how to respond." said Iran's Mahmoud Ahmedinejad. Venezuela's Hugo Chavez predicted oil at $200 a barrel if, as he put it, the U.S. was "crazy enough to invade Iran."