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London Bullion Report

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Precious metals challenge overhead resistance on oil/investment comments

Mon, Jun 30 2008, 08:18 GMT
by James Moore

The Bullion Desk


London, 30 June 2008 - The precious complex remains in positive territory this morning after climbing last week in reaction to the Fed’s apparent indecision, as well as being buoyed by record oil prices as NYMEX crude traded just shy of $143/barrel. August futures are trading up $1.59 this morning from Friday’s close of $140.21, but could well continue on towards $150 following comments from Jim Rogers this morning saying avoid the dollar "at all costs" and "The best investments in 2008 are commodities and natural resources." EUR/USD is trading around 1.58 this morning ahead of economic data today showing Chicago PMI for June.

Gold is holding close to $930 this morning after seeing an initial profit taking dip to $925.50 and is likely to remain in a choppy mood across the rest of the day as traders carry out month/quarter end book squaring. However, market sentiment has turned more positive after the Fed decision last week, and given the wider Euro/US rate differential the dollar will remain in a more bearish mood. In addition, the renewed surge in oil prices and the likely increase in demand this will have on commodity indexes, as well for inflationary hedges, will be favourable for gold. On the charts gold is currently confined between uptrend line at $871 while a break of chart resistance at $931 should open the way for an initial push to $940 but potentially back to the highs from March/April around $953.

Gold

Silver closed last week at $17.63 and is currently capped by chart resistance around the 100-day MA ($17.73), and a series of chart highs around $16.65. Clearance of these resistance levels should open the way to challenge the top of the current $16.50-18.50 range or potentially the $20/oz area.

Silver

Tight fundamentals continued to underpin platinum last week with the white metal closing at $2060. Further chart resistance is expected around $2080, although given the more bullish sentiment across the commodities spectrum we would expect a breach of the $2110 level to trigger a re-test of $2200.

Platinum

Chart resistance around $470 again caused palladium to struggle Friday. A break higher should find resistance at $485/515 while support below is pegged at $454/446.

Palladium


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