After closing flat at 942.3 yesterday, gold for April delivery soars to above 960 in Asian session today, signaling recent rally has resumed and further strength to 989.6 and then 1033.9 is expected.

The themes for trading gold recently are economic uncertainty as well as upcoming inflationary pressure as driven by economic stimulus plans by government around the world. These themes should remain in play in the coming months.

According to Confederation of British Industry, UK's GDP may contract 3.3% in 2009, down from the 1.7% contraction projected in November and the biggest decline since 1980. Moreover, Government's net borrowing will expand to 10.6% of GDP in the next financial year (148.7B pound) and then surge to 11.8% of GDP the following year. Moreover, Lloyds' takeover of HBOS made its senior debt rating reduced 3 levels to A1 by Moody's. The market is filled with concerns that nationalization of problematic banking groups in the UK is inevitable. CDS spreads in the UK has jumped significantly, indicating increasing worries on default of the nation's sovereign debt.

The dollar has been moving in tandem with gold with the dollar index rallies to 87.42 after breaking resistance at 86.81 (Jan). The dollar gains ground against major currencies except Japanese yen. USD, after breaking 1.27-1.275 area, rises against the Euro for another day as investors concern about public and banking sectors in Europe. CDS spreads have been rising recently while European banks' exposure in Eastern Europe poses additional threat to euro.

Platinum also rises to 1082 in Asian morning but remains pressured by resistance at 1095.8 made last week. While we believe strong investment demand will continue supporting prices of precious metals, fundamentals of platinum worsened. Last Friday, European Automobile Manufacturers' association reported that new passenger car registration in Europe declined for the 9th straight month and by 27% yoy in January. Earlier this month, US also reported auto sales in January plunged to the lowest level since 1981.

Oil price retreated again after briefly recovering to $38/bbl. Currently trading at 36.8, investors sell the black gold amid worries on flaggy economic outlook. Although there may be chances for crude oil to weaken further to even below previous low at 33.2 as inventory continues to build, decline in demand has slowed down recently. Accompanied with more aggressive OPEC and non OPEC production cuts and back-to-normal refinery operation after maintenance and widened margin, we may see oil price bottoming out earlier than previously expected.