Barclays Capital Market Quotations

Market conditions will remain nervous and there is a general sense of uncertainty over the next big price move.

What is clear is that despite OPEC's extremely high current output levels there is little sign of a large surplus forming in the market just yet.

The market could be subject to further weakness in the near term towards $535. The technical charts will be closely monitored in this correction phase for any signs of a broader trend reversal.

The market continues to appear well-supported and we see the overall macroeconomic and geopolitical environment as favorable for gold.

The markets seem to be pricing in close to zero probability of something going wrong.

The dichotomy in the US market between tight products and flush crude has become more pronounced.

It is now appropriate to talk of a major energy crisis after Hurricane Katrina pushed U.S. energy markets beyond the edge. The impact of Katrina has been to produce a significant discontinuity.

This market continues to look very strong ... Enthusiasm among speculators is founded on its constructive fundamentals and general interest across commodities.

Absent new developments in credit, the continued synthetic demand, the hedge fund bid, strength in the leveraged loan market, stability in U.S. Treasuries, and credit appetite from Asia will likely continue to support the market overall.

While we think such high prices are not justifiable by gold 's commodity fundamentals in terms of market balance and inventory levels, the combination of a surge in oil prices above $70/barrel, geopolitical tensions and strong momentum is dominating at present, and further gains cannot be ruled out.

Unless upcoming speeches indicate that other FOMC (Federal Open Market Committee) members are beginning to shift their views, we do not believe Olson's dissent represents the start of a broader movement within the FOMC toward slowing the pace of rate hikes.

It is worth noting that prices are getting little support from the physical markets despite relatively steady prices of late, which suggest that threat of further correction remains.

U.S. gasoline inventories have fallen further below their five-year average, while U.S. oil demand remains strong. Our estimates of current market balances indicate a significant tightening relative to a year ago.

U.S. payrolls are much more pivotal today than in prior months. A strong outcome would encourage the market in its increasingly optimistic view of the US economy and hawkish view of the Fed.