Gold ticked back from its highest Dollar and Euro prices in almost 3 weeks at lunchtime Tuesday in London, holding above a one-month high of £700 per ounce for UK investors as European shares and US stock futures held flat.

The CRB commodities index rose almost 2%, with sugar nearing a three-decade high and US crude oil contracts touching $82 per barrel – more than twice the price of a year ago.

Consumer price inflation in the 16-nation Eurozone leapt in Dec. to a 10-month high new data showed early Tuesday, unwinding the last of 2009's second-half deflation.

"Buy stops were triggered" as Gold rose late in Asia says a Hong Kong dealer today, with professional traders re-entering the gold market after last month's 12% drop.

"The Dollar remains the key driver," says an analyst's note. "All commodities have benefited from an increase in risk appetite."

But "Buying interest in the physical market seems to have faded on Gold's [1.8%] rally yesterday," says Standard Bank's daily commodity briefing.

"We need to see much more Dollar weakness on a trade-weighted basis to sustain a rally in gold." (Is gold's 10-year run all about the Dollar? Read Dollar Nonsense here...)

Monday saw the 1128-tonne SPDR Gold trust shed five tonnes of the gold backing its exchange-traded shares, the first such drop in almost a month but only equal to the annual 0.4% expense ratio it charges stock-holders.

Long-dated government bonds fell Tuesday morning, pushing 30-year US Treasury yields up to 4.75% ahead of Pending US Home Sales data and Vehicle Sales figures for Dec.

Latest data from US regulator the Commodity Futures Trading Commission showed speculative, non-industry gold traders cutting their "net long" position in Comex derivatives in the last week of 2009, down 2.5% to the equivalent to 913 tonnes.

The "net short" belonging to commercial traders hedging their inventories also fell to a three-month low, but in aggregate, these miners, refiners and wholesalers continued to hold 3 bearish contracts for every 1 bullish bet.

The commercial traders' "bull ratio" peaked at 42% of their directional bets as Dollar Gold Prices slumped in the fall of 2008.

"The fact that speculative long positions have recently been at all-time highs is a further illustration of the interest in the [precious metals] market," writes Rhona O'Connell of the GFMS consultancy at MineWeb.com.

Reviewing 2009, O'Connell says cumulative investment flows into the world's major Gold ETF trust funds "netted out" at $16.9 billion last year.

Bond funds meantime saw global inflows of $158bn according to analysts EPFR. Emerging-market equity funds received $64.5bn.

Latest data from the London Bullion Market Association (LBMA) meantime show daily turnover in the professional wholesale market hitting a 6-month high in November, with the value of wholesale dealing (both in physical and also in "unallocated" credit accounts) rising to its strongest level since Jan. 2008.

According to international money market (IMM) data, speculative traders continued to hold a "long Dollar" position in their forex accounts last week, reversing the strongly bearish position taken through to early December.

The International Monetary Fund's new 2010 Outlook meanwhile forecast strong gains in commodity prices – already up 24% in 2009 – as "industrialization continues in emerging and developing economies.

"Accommodating this demand will eventually require further capacity expansion in many commodity sectors, with some need to tap higher-cost sources," says IMF researcher Thomas Helbling.

"Demand is expected to continue rising at a solid pace."