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London Bullion Report

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Gold edges towards top of range on oil gains/safe−haven demand

Thu, Aug 28 2008, 07:40 GMT
by James Moore

The Bullion Desk


London, 28 August 2008 - Despite good support from the physical sector and further gains by the energy sector the majority of the precious complex finished Wednesday little changed after better than forecast durable goods data led the dollar to recover its earlier weakness. EUR/USD settled at 1.4720 having traded 1.4636-4775 and is likely to lend further direction today with the latest US GDP reading, which is expected to rise to 2.7%. Other data will show Jobless Claims for the week of August 23rd. NYMEX crude reached a high of $119.63 and closed up $1.88/barrel as concerns mounted Hurricane Gustav would disrupt operations in the Gulf of Mexico. October futures are currently trading up around 65-cents this morning.

Good volumes of physical demand again provided gold with upside momentum in yesterday’s Asian session, with the yellow metal trading to $829.25 before running into resistance. Initial profit taking emerged at the start of European trade however Euro strength led gold to extend its gains, eventually posting the day’s high at $835.25 just before the US opening. Better than expected US data led gold to drift lower across the remainder of the day, dipping back to $822.75 and closing at $828. Gold has again seen a strong Asian session this morning, testing back above $830/oz as the metal continues to benefit from increased investment demand as mounting tension between Russia and the US, inflation/recession fears, interest rates & credit tightness boost the appeal for safe-haven assets. With the market still in summer holiday mode we expect gold to remain rangebound between $800-45 but after this weekend’s Labor Day holiday we could see gold make a more convincing challenge of overhead resistance around the psychological $850/oz level.

Gold Price

Silver closed at $13.54 yesterday after stalling ahead of pivotal resistance at $13.95. The metal has tracked gold higher this morning and may look to extend higher in the coming sessions as momentum indicators area still pointing firmly higher. Clearance of the $13.95 level should enable silver to challenge towards the 400-day MA at $15.02.

Silver Price

Platinum finished Wednesday with a gain of $20 as the metal continued treading water in the recent $1410-90 range. We expect the consolidation mood to continue in the coming sessions as the metal carries out further base building, and may need gold to break above $850 before challenging towards $1540.

Platinum Price

Echoing the sentiment of sister metal platinum, palladium also saw a range bound day yesterday, closing with a $4 gain at $288. Support is pegged at $278/270 while strong resistance is seen at $300.

Palladium Price


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