Friday December 10, 2010   RESOURCE INTELLIGENCE-    By Jim Wyckoff   

Gold prices are trading not far from unchanged levels Friday morning, as modest profit-taking pressure is being offset by investor buying interest due to a weaker U.S. dollar. Gold is pausing following recent, more volatile, trading action. February Comex gold last traded down $2.00 at $1,390.80 an ounce. Spot gold last traded up $2.80 at $1,390.25.

The U.S. dollar index is trading weaker Friday morning. The index is still in a four-week-old price uptrend on the daily bar chart and technical odds are increasing the index has put in at least a near-term low. The greenback has benefited recently from ongoing financial woes in the European Union.  Rising U.S. Treasury bond and note yields this week have also boosted the U.S. currency. However, Friday morning bond yields had backed down a bit and the Euro currency was seeing a short-covering bounce, which did put some downside pressure on the dollar index.

Reports overnight said China has again moved to tighten its monetary policy to dampen its domestic demand for raw commodities. The Chinese central bank reportedly raised its banks’ reserve requirement ratios. The move by China Friday is raw-commodity-market-bearish, but is seen as less aggressive than other potential monetary policy tightening measures.

U.S. economic data due for release Friday include import and export price indexes, the University of Michigan consumer sentiment survey and the monthly Treasury budget statement.

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