London, 21 August 2008 - The precious complex posted solid gains yesterday with gold rising 3% and platinum up 6% as the dollar lost ground amidst rising tension between Russia and the US, while recently instigated shorts were forced to cover. The gains were not confined to the precious metals as the major commodity Indexes all closed in positive territory while crude oil regained the $120/barrel level, settling with a gain of $5.53. EUR/USD rallied from a low of 1.4730 to close on its highs at 1.4903 although the absence of economic data today could see further focus on oil movements and developments on the geo-political front.
Gold’s close above $800/oz Wednesday set the tone for yesterdays trading movements as the metal again saw strong physical demand during Asian trading hours. The metal edged above $820 in early Europe before running into resistance at $824.50 as the Euro ticked lower. The change in direction by the Eurozone currency soon after saw the return of buying interest with gold challenging $830 shortly after the US opening, and eventually reaching a peak of $839.35 before closing at $833.40. Yesterdays gains again prove gold’s role as a hedge against inflation as well as periods of economic unrest and geo-political tension. While further short covering could boost gold in the coming sessions we would look for technical resistance to emerge around $845, while a longer period of consolidation in the $800-840 would help gold establish a much stronger base, offering the physical base more time to adjust to higher prices.
Silver tracked gold to a high of $13.90 during US trade and closed Thursday at $13.76 with a gain of 70-cents. As with gold silver may look to extend higher in the coming sessions as further short covering emerges. Also with the metal beginning to recover we could see fresh ETF related demand from longer-term players. A close above $13.85 would suggest a move back towards $15/oz.
Platinum closed with a $90/oz gain yesterday as speculative buying interest returned during NYMEX trade. The white metal will now look to challenge technical resistance at $1490 (previous record high), which if cleared could open the way to challenge $1500.
With sister metal platinum hogging the lime light palladium could only muster an $8 gain by the US close. Chart support is seen at $280 with resistance expected at $294/305.
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