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London Bullion Report

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Precious metals find support after cash rout

Tue, Dec 2 2008, 10:12 GMT
by James Moore

The Bullion Desk


London, 02 December 2008 - Cash concerns in the build up to year-end and the confirmation the US was in recession triggered a fresh round of risk/asset liquidation Monday with equities and commodities hard hit. The Dow lost 7.7% or 679.95-pts and the Nikkei is down over 500-pts this morning while crude oil closed below $50/barrel and is currently trading at $47.70. Despite the jump in volatility, with the VIX closing at 68.51 from 55.28 Friday, the currencies were largely sideways with EUR/USD closing little changed at 1.2615 while the USD Index finished just 0.5% higher. US Economic data today will show the ADP Employment Survey, Q3 Productivity & ISM Service Index.

Gold was initially supported around $810 yesterday before beginning to drift lower once trade got underway in Europe. Gold slipped initially to $802 before breaking below $800 ahead of the AM fix and stabilizing around $790. The slide continued on the US opening with gold eventually touching a low of $768.90 and after closing at $776.50 gold has touched a 1-week low of $763 overnight. Given the recent rise in inter-bank cash rates and the likelihood of further risk reduction towards year-end we expect commodities to remain vulnerable to further bouts of liquidation, although gold should find good support back towards $745.

Gold

Silver dropped over 11% yesterday posting a low of $9.18 during US trade. The metal closed at $9.40 but has dipped lower again overnight to $9.20. Direction will continue to depend largely on gold with silver holding broadly between $9-10.65.

Silver

Platinum fell sharply in Asian yesterday following weak Japanese auto sales data. The white metal closed down $76 at $802 and has dipped to $787 overnight as fresh selling emerged from OTC and TOCOM traders. For now the metal should hold the broad $765-885 range.

Platinum

Palladium closed Monday at $172 yesterday after following platinum to a low of $164. Chart support is pegged at $164/155 with resistance expected at $194/204/220.

Palladium


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