Gold
Gold was down $2.80 to $863 per ounce in New York on Friday and silver was down 5 cents to $15.30 per ounce. Gold is marginally down in Asia and Europe and the London AM Fix was at $857.50. Gold started the first week of the New Year very strongly and was up some 3% in last weeks' shortened first week of trading and thus some profit taking and consolidation were to be expected.

At the London AM Fix gold was trading at £435.04 GBP and €580.57 EUR. Gold remains near record all time non inflation adjusted highs in both currencies. Gold is up seven years in a row against the Japanese yen and Chinese yuan (fixed as it is to the dollar). Gold has risen six out of the last seven years against the Australian dollar, Swiss franc, British pound and Indian rupee. It is very significant that gold has climbed in each of the past three years against all the major currencies of the world. This shows that gold's strength is not solely a function of US dollar weakness and gold is not rallying because it is cheaper for holders of non US dollar currencies. Internationally, fiat currencies are now being created at unprecedented rates with unprecedented credit creation and money supply growth of 10% plus in all major economies.

The dollar's strength and oil's weakness has slowed gold's gallop this morning but gold's trend remains strongly up and as ever it is important that investors continue to "make the trend their friend". While their may be profit taking and consolidation gold may continue to surprise to the upside and $900 is being cited as a possible price target prior to any meaningful correction. Support is at the 50-day moving average at $815.00 and the recent low price in the $775 to $785 range.

Volatility looks set to increase in the gold market but the fundamentals remain strong with the poor jobs report further showing a slowing US economy which nevertheless faces considerable inflationary pressures. A serious bout of stagflation does not bode well for the US economy or the faltering dollar.

Price Targets
$1,000 per ounce gold looks like being achieved earlier in 2008 then many had expected and $900 is a good target in the coming weeks. The inflation adjusted high of some $2,200 per ounce looks increasingly like it will be achieved in the next 3 to 4 years.

Weekly Survey
Gold may rise to a record on speculation a weakening dollar and surging energy and commodity prices will boost the appeal of the metal as a hedge against inflation. Sixteen of 25 traders, investors and analysts surveyed by Bloomberg from Mumbai to New York on Jan. 3 and Jan. 4 advised buying gold, which rose 2.7 percent last week to $865.70 an ounce in New York. Six said to sell, and three were neutral. Spot gold and crude-oil futures reached records last week and gold was up 31 percent in 2007, while the dollar dropped 9.5 percent against the euro. The majority of analysts surveyed Dec. 27 and Dec. 28 anticipated last week's gain. The survey has accurately forecast prices in 119 of 192 weeks, or 62 percent. This week's survey results were - Bullish: 16 Bearish: 6 Neutral:3

ETFs
The Wall Street Journal reported that investor interest in the precious metals continues to grow, with the two major ETF's for gold and silver adding approximately 60k toz and 3 million toz respectively. The gold ETF now has more gold than the People's Bank of China.

This Week
The very poor unemployment data on Friday increased the likelihood of a recession in the U.S. and some Asian markets were down on these concerns. They have increased the odds of a 0.50% rate cut at the Fed’s policy meeting at the end of January. This will likely put the dollar under even further pressure. The US data schedule is relatively light in the coming days but a host of Fed speakers are scheduled over the course of the week, including Bernanke, and markets will be keeping a close eye on references to the policy outlook.

Silver
Silver is trading at $15.30/15.31 at 1130 GMT.

PGMs
Platinum was trading at $1528/1533 as per above (1130 GMT).  
Palladium was trading at $365/370 an ounce (1130 GMT).

Oil
Oil remains at elevated levels above $95 per barrel and NYMEX light sweet crude oil (FEB08) was trading at $97.46 a barrel creating gold buying interest from investors looking to hedge against surging inflation.