Investment fund flows and strong retail demand supported precious metals amid a jittery US dollar and continued volatility in crude oil prices. After strengthening to $1.4691 against the euro during the Londong trading session, the greenback was range-bound between $1.4767 and $1.4673, with speculation rife that the US government might take over Fannie Mae and Freddie Mac.

Reportedly, Lehman Brothers has failed in its bid to sell a large stake of the company to Asian buyers. The company is coming under increasing pressure to raise new capital, as more write-downs are expected. This could put some pressure on the dollar today.

The US DOE oil data releases gave mixed signals, exacerbating crude oil volatility. The crude oil inventory report showed a surprisingly high surplus, with stocks rising 9.39 million barrels (markets had expected a mere 1 million barrel inventory accumulaton). Following this, WTI crude oil prices plummeted from $117/bbl to $112/bbl in the New York session. However, prices were then supported on the upside by the DOE's gasoline inventories report, which showed a 6.2 million barrel decline against markets expectating gasoline inventories to drop by 3 million barrels. Subsequently, WTI crude oil prices ratcheted to $115/bbl, and then rose above $116/bbl in aftermarket electronic trading.

Oil prices at current level could attract further investment fund flows into precious metals today, especially given that technical signals still indicate that precious metals are due for a correction to the upside.

Economic data releases today - in the form of inital jobless claims, Philadelphia Fed confidence index and US leading indicators - should give further clues on the dollar as the speculative premium fizzles out.

Gold opened the day at $814 in Asia and drifted sideways into early morning trading in London before holding steady, at $815, at the PM fix. The metal was volatile in New York, swinging between $800 and $818 amid oil price volatility, before settling at $810. Support for gold is at $804, with $793 - $775 providing secondary support. Primary resistance is at $822 - $829, and secondary resistance at $847.