Gold prices rose on a weaker dollar and strong Asian physical demand

The euro rose to an eight-week high on increasing optimism that Europe can defuse its debt crisis, but equities fell on poor US housing data and bank earnings, while a rally in commodities faded.Samarjit Shankar, managing director of global foreign exchange strategy at BNY Mellon in Boston said: "There is a growing sense of optimism that European leaders are finally getting their act together and working in a unified manner."
European shares ended lower as disappointing figures from Goldman Sachs and a fall in US housing starts hurt sentiment and prompted some investors to take profits. Miners featured among the top losers.Klaus Wiener, chief economist at Generali Investments said: "This is just a blip in the market which is otherwise drifting higher. What we are seeing now is some profit taking and I would not read too much into that. What supports equities is a sound macroeconomic environment and that is still in place. I think the earnings season will be quite favorable and will support the market. Profit margins are still high and demand is improving."
Gold prices rose on a weaker dollar and strong Asian physical demand, while platinum and palladium hit multi-year highs on an improving global economic outlook. The dollar fell to an eight-week low against the euro on growing hopes euro zone officials will navigate the sovereign debt crisis.Barclays Capital analyst Suki Cooper said: "Given that we're now in the run-up to the Lunar holidays, we have seen some strong physical demand materializing in China and reports about bar premiums trading at two-year highs and mint shortages, so there's good physical demand on the downside providing a cushion to prices."
The Nikkei average was seen encouraging and got a boost from property and banking shares to edge higher on Tuesday. While few of the investors cautiously waited to see Wall Street's reaction to news that Apple Inc CEO Steve Jobs was again taking medical leave.Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management said: "Banks and property shares have gained as foreign investors have piled in, then we saw some profit-taking and now they're off again, boosted by domestic retail investors. Individual investors, who now account for about 30 percent of the market -- a very high percentage -- are pushing those stocks higher, showing that sentiment in the market is very strong."
The US markets were closed on a dull note as disappointing results from Goldman Sachs and Wells Fargo put a damper on the rally. The Nasdaq fell as more disappointment in earnings came from chipmaker Cree Inc.Financial and technology stocks have been driving the surge that has pushed the benchmark index up nearly 10 percent since the start of December, which some investors believe has stocks primed for a pullback.Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont said: "Even stocks here that are beating expectations are not acting favorably so (for) the market, it may be time for a
pause,and that may be what we are seeing here."
US crude prices rose on supply concerns in the North Sea, but a stuttering economic recovery in the United States kept prices off the key $100 level and saw US crude ease for a second day.Andy Lebow, a trader at MF Global in New York said: "It's a story of relative supply. Brent has seen tight supplies and good demand from Asia, while the expectations are supplies will remain at high levels around Cushing."
The US Treasury Market closed on a positive note as US stocks fell after a report showed housing starts declined more than forecast in December.Kevin Flanagan, Purchase, New York- based chief fixed-income strategist for Morgan Stanley Smith Barney said: “Given the backup in rates yesterday, lower stock prices and no news coming out of Europe, you get an environment where the buyers step in.”
German government bonds advanced as stock markets declined and US housing data suggested the US recovery is struggling, fueling demand for safer assets.Eric Wand, an interest-rate strategist at Lloyds Corporate Bank in London said: “The market probably got ahead of itself” after Trichet’s comments. Short-term paper has a bit more scope for recovery. I don’t think the ECB is in a great rush” to raise rates."
The US markets were closed on a dull note as disappointing results from Goldman Sachs and Wells Fargo put a damper on the rally. The Nasdaq fell as more disappointment in earnings came from chipmaker Cree Inc.Financial and technology stocks have been driving the surge that has pushed the benchmark index up nearly 10 percent since the start of December, which some investors believe has stocks primed for a pullback.Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont said: "Even stocks here that are beating
expectations are not acting favorably so (for) the market, it may be time for a pause, and that may be what we are seeing here."