By Jon Nadler
Shifting winds of various types created an amalgam of background conditions that pushed gold prices higher and the dollar lower overnight. Hurricane Gustav's winds were still unpredictable as regards their ultimate destination, but were of sufficient concern to raise oil prices back above $117 as the day started and as the trade speculates about a possible impact on places such as Galveston TX.

Gusts of worry were in the air as well over the financial sector as news that the FDIC might borrow money from the US Treasury to enable it to pay depositors of banks which are likely to fail in coming months.

Finally, while economic conditions are slipping in Europe, an ECB council member said today that he does not see justification for a rate cut based on current economic conditions and that policy makers still see inflation as public enemy #1. Today's numbers however, might reveal that inflation moderated in Germany this month. Thus, no urgent need to hike rates either.

As a result, currency markets witnessed the greenback give back a whopping .51 on the index to fall to 76,74 and to $1.475 against the euro. While some traders still expect the US currency to reach 1.40 vis a vis the common currency, the bets of the day are stacking up towards a stab at near 1.50 as the more likely and first occurrence. Others see a possible double-top formation developing in the US currency and are pulling the profit trigger on it following conditions perceived as overbought.

Given the above background picture, gold prices rose nearly 1% ahead of the NY open and reached highs near $836 while the midweek session started the day on the upside as well. Spot gold was quoted at $833.00 per ounce and the trade was looking ahead at durable goods orders numbers which are due from today's economic calendar.

Expectations are that the orders probably stalled and/or fell in July. Silver rose a dime to $13.67 while platinum surged $34 to $1429 and palladium added $7 to $290 per ounce. Gold encounters first level resistance near current levels and then above $855, however a decisive push above $870 is still required before traders conclude the worst is over.

Speaking of the worst being over or still down the road, commodity market observers and traders are still at odds with one another as regards a verdict. Analysts are looking for the slightest signs that a trend is forming, often focusing on minute details in order to glean what may be happening. Nothing unusual, this. It happens in every market that is undergoing such dramatic shifts and it makes for lively debate. We bring you now the unofficial diagnoses of several such participants, as presented by Bloomberg's Madelene Pearson in an exclusive piece:

"Corn and soybeans have rebounded as reduced crop yields push U.S. stockpiles to near five-year lows. Oil has reversed on U.S.-Russian tensions. Nickel has turned after Xstrata Plc closed a Dominican Republic plant.

The worst rout in the history of commodities may be ending, signaling a replay of the 2006 tumble that preceded a doubling of prices in the next 17 months as measured by the Standard & Poor's GSCI index. Only this time, the driver is supply cuts rather than increasing demand. Supply constraints are ``coming more and more to the fore'' and that ``will separate the performance of individual commodities,'' said Alan Heap, global commodity analyst at Citigroup Inc. in Sydney. ``We're still looking for higher prices next year and in some cases the year after.''

Commodities are in their seventh year of gains, fueled by demand led by China and India and disruptions to mine and farm supplies. A rebound in raw materials from four-month lows may boost profits at BHP Billiton Ltd., raise costs at Nestle SA and stoke inflation, limiting the ability of central bankers Ben S. Bernanke and Jean-Claude Trichet to cut interest rates and revive growth in the U.S. and Europe.

Oil is up 3 percent from a more-than-three month low after gaining 10 percent on concern supply may be disrupted by tension between Russia and the U.S. over Georgia and Poland's missile shield. OPEC may consider output cuts at its Sept. 9 meeting, Venezuela Energy and Oil Minister Rafael Ramirez has said, and U.S. gasoline stockpiles are dropping. Oil ended at $114.59 a barrel Aug. 22, down 22 percent from its record $147.27 July 11, and traded up 0.5 percent at $115.20 today.

Investor Jim Rogers, who in April 2006 correctly predicted oil would reach $100 a barrel and gold $1,000 an ounce, said Aug. 23 that crude oil prices will climb. ``Over the course of time, it's a bull market,'' Rogers, 65, chairman of Rogers Holdings, said after an investor conference in Kuala Lumpur. While oil could fall to $75 or rise to $175, prices will appreciate during the next 10 years, he said.

Copper, after plunging as much as 20 percent from its $8,940 a ton record on July 2, has rebounded from a six-month low as output fell at BHP Billiton, the world's biggest mining company, and Chile's Codelco, the largest producer. Aluminum may gain as power shortages force producers in China to curtail output, said Barclays Capital, the securities unit of London- based Barclays Plc. Xstrata, the fourth-largest nickel refiner, said Aug. 19 the suspension of its Falcondo operations in the Dominican Republic may last four months. The operations produce 29,000 tons of nickel a year, or about 2 percent of world primary nickel production.

Corn and soybeans, down as much as 37 percent from their peaks, gained the past two weeks as delayed plantings threaten to reduce U.S. yields and on concern export tax protests may disrupt supplies from Argentina, the second-largest exporter of corn and third-largest of soybeans. That would strain world cereal stockpiles that the United Nations' Food and Agriculture Organization says are near a 30-year low.

``I don't think the commodity boom has ended at all,'' Malcolm Southwood, a Melbourne-based commodities analyst with Goldman Sachs JBWere Pty, said Aug. 21. ``We've got a little bit of a cyclical downturn in a longer-term bull market, and the structural fundamentals are very much intact.''

Commodities, as measured by the Standard & Poor's GSCI index of 24 raw materials, had their fastest 30-day decline to Aug. 15, slumping 21 percent, after peaking July 3.  Continued...