London Bullion Report

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Gold remains under pressure as dollar bulls flex muscles
Fri, Sep 5 2008, 07:39 GMT
by James Moore
The Bullion Desk
London, 05 September 2008 - Despite a strong start for the complex the precious metals finished Thursday in negative territory as the dollar continued gaining ground, eventually reaching a six-month high against the Euro in late trade. EUR/USD posted a high of 1.4544 in Europe before slumping to a low of 1.4214 on the close in reaction to comments from various European Finance ministers calling the Euro "overvalued" and the Eurozone economy "weak". Economic data from the US today will show Non-Farm Payrolls for August. Crude oil extended its decline yesterday amidst the bearish European economic outlook. NYMEX futures for October closed down $1.46 at $107.89/barrel and have posted modest losses so far this morning.
Gold was again boosted by strong physical demand in Asia yesterday, rising to $814.85 during European trade. The rally ran out of steam as the dollar bottomed, with gold trading $806-12 across the rest of Europe and into early US trade. The dollars reaction to the ECB rate statement soon led the market lower with gold dipping to $794.10 before closing at $800.50. The bullish dollar has led gold to extend lower overnight, trading to $790.50, and given the increasing speculation of recession in the Eurozone, and the likely effect this will have on the Euro, we could see gold remain under pressure in the short-term as the need for cash increases. However gold’s unique safe-haven attributes are likely to again show through, leaving the longer-term bull trend intact.

Silver traded $12.63-13.20 yesterday, closing at $12.90, and has been under pressure so far this morning. Silver will remain reliant on gold for direction in the coming sessions, and with short-term momentum indicators pointing lower silver could be looking at a re-test of last month’s low ($12.11) with interim support pegged at $12.40.

TOCOM long liquidation forced platinum to a low of $1326 in Asia yesterday before swiftly recovering on the European opening and extending to $1434. The white metal remained supported at $1390 the remainder of the day, but after closing at $1403 fresh pressure has been applied by TOCOM longs. So far platinum has found good psychological support around the $1340 level and good industrial demand has been witnessed towards $1300/oz, however a failure to hold above the recent $1304 lows could trigger a deeper move back towards the $1250-60 area.

Palladium closed little changed Thursday at $286. Having failed to clear technical resistance at $305 palladium may have to spend more time consolidating with support pegged at $280/274/266.

Published on
Fri, Sep 5 2008, 07:42 GMT
Archive
- Precious metals slide on payroll number
Published On Fri, Jul 3 2009, 07:26 GMT
- Gold and silver tread water ahead of ECB & payrolls data
Published On Thu, Jul 2 2009, 07:34 GMT
- Dollar weighs on gold, closes quarter with marginal gain
Published On Wed, Jul 1 2009, 07:33 GMT
- Gold tests higher but meets resistance
Published On Tue, Jun 30 2009, 07:41 GMT
- Gold tracks dollar, platinum ETF holdings drop
Published On Mon, Jun 29 2009, 07:31 GMT
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