Currently trading at 74.8, WTI crude oil falls in European session after price edged higher to 75.58. The 3-day rally last week triggered profit-taking while strength in USD also weakened demand for commodities. Gold continues trading sideways around 1240.

Recovery in market sentiment has lowered demand for gold over the past few days. Yet, the market remains bullish towards the metal in the long-term. GFMS reiterated its stance that gold should reach 1300 this year with investment demand the major price driver. According to the firm, ‘there is a wide enough group of people who are going to continue buying gold for a variety of reasons and that’s going to be the key driver of price action’ while ‘the physical market, the jewelry market, will be playing a somewhat minor supportive role in price determination going forward’. Moreover, ‘there is going to be in all likelihood a surge in investment demand toward the end of this year, driving prices toward the 1300 level and possibly beyond’.

In Japan, the BOJ announced a 6-month fixed-rate operation of 10 trillion yen, in addition to the 3-month facility of 20 trillion yen announced in March, after an emergency meeting today. The measures aimed to encourage a decline in market interest rates and further enhance easy monetary conditions. Japanese yen dropped against the dollar and the euro before the meeting but pared losses afterwards as the steps are expected too mild to curb yen’s appreciation.

Elsewhere in the Eurozone, confidence improved to the highest level in more than 2 years. The European Commission reported that economic confidence for the 16-nation region rose to 101.8 in august from a downwardly revised 101.1 in July. The optimism was probably driven by strong European data in July. Other confidence indices picked up with consumer confidence edging higher to -11 in August from -12 a month ago and services confidence climbing to 7 from 6 in July. Industrial confidence stayed flat at -4.

Focus of the day is again in the US. The July personal income report probably shows gains of +0.3% in both personal income and spending in July, following flat readings in the prior month. Downside surprises cannot be ruled out as employment situation in the US has been weak. The smaller-than-expected increase in private payrolls raised worries about declines in incomes and spending.