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London Bullion Report

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Gold gains ground, eyes psychological resistance at $845

Fri, Aug 29 2008, 11:17 GMT
by James Moore

The Bullion Desk


London, 29 August 2008 - The precious complex closed Thursday with only modest gains after better than expected economic data curbed the metals challenge of the technical and psychological $845 level. EUR/USD traded to a high of 1.4809 before reversing course as revised growth proved stronger than expected. The Eurozone currency settled at 1.4703 and has edged higher this morning ahead of busy day for economic data, with the release of European CPI, Consumer Confidence & Unemployment as well as US Consumer Spending, PCE Index, Chicago PMI and Consumer Sentiment. Supply jitters, prompted by Hurricane Gustav, led NYMEX crude futures to a high of $120.50/barrel before reversing as the IEA pledged to fill any supply gaps caused by storm disruptions. October futures are currently trading up $1.40 after closing at $115.59.

Good physical demand again bolstered gold in Asia yesterday with the yellow metal rising to $832.50 by the European opening. Further pockets of buying led gold initially to $836.75 before edging above $840 on the US opening ahead of the revised GDP reading. Despite the stronger than forecast reading gold hit a 3-week high of $844.05 before trading lower as the dollar rallied, posting a low of $825.25 before closing at $831.60. Gold has again traded higher overnight as oil and the dollar continue provide intra-day direction, while pre-wedding season physical buying provides background support. As well, with the US and Russia still at logger-heads over Georgia and credit market issues continuing to send jitters through the financial markets gold remains an attractive choice to longer-term investors, looking to factor in some safe-haven protection, and could look to challenge above $850 having established a good base above $800/oz.

Gold Price

Silver made steady gains across yesterday’s Asian and European session, eventually touching $14.04 in US trade as gold reached its highs. The industrial precious metal tracked gold down to $13.48 but was able to close at $13.63 and has challenged back to chart resistance at $13.85 this morning. While gold continues to provide much of the metals direction a close above $13.95 should signal a challenge of technical resistance at the 400-day MA located at $15.02.

Silver Price

The rallies in gold & silver led platinum to challenge psychological resistance at the $1490 yesterday with the white metal posting a high of $1495 in NYMEX trade. The metal stalled, but was able to close with a gain of $36 at $1474. For now we expect platinum to hold the current $1410-90 range although an upside breakout in gold or silver could trigger a rally to pivotal resistance between $1525-35.

Platinum Price

Palladium added $4 by Thursday’s close, settling at $292 and has pushed towards $300 this morning. Despite less favourable fundamentals palladium appears to have established a good base and may now challenge back into the $305-30 area as fund interest picks up.

Pallladium Price


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