London, 07 October 2008 - As turmoil continued to spread through the global financial system yesterday the precious complex benefited from a wave of safe haven buying with gold finishing 4.5% higher. The major commodity Indexes all closed in negative territory with the CRB down 4% and UBS CMCI losing 5%. The Euro lost further ground against the dollar Monday, closing at 1.3496 as deeper cracks appeared in the European banking system and EU minister disagreed on the course of action. Falling demand expectations put further pressure on the energy sector yesterday with NYMEX crude closing down $6.07 at $87.81/barrel, although bargain hunters have lifted November futures back above $90/barrel this morning.
Gold rallied to a high of $870.50 by the close of US floor trade yesterday as safe-haven bargain hunting and fund short covering emerged, while the metal found strong physical buying interest earlier in the day below $850/oz. The yellow metal remains in a firm mood this morning and should look to make further gains in the coming days as flight-to-safety demand increases and speculative short covering emerges, while seasonally strong physical demand helps provide a strong base.
Silver saw a mixed day Monday, trading between $10.93-11.41, closing mid range at $11.18, and has held around yesterday’s highs so far this morning. Despite its volatility silver should benefit from the gains in gold and increasing safe-haven investment demand. The charts are also looking more favourable this morning with silver holding above trend-line support at $10.91, while momentum indicators look set to turn higher, potentially lifting the metal back to the $13-14 area.
Platinum finished $17 higher at $978 yesterday and has rallied above $1000/oz this morning after strong demand from OTC and TOCOM bargain hunters. This morning’s rebound is encouraging and following Friday’s reduction in the NC shorts we could see further short covering. However the slowdown in auto sales and improved mine supplies will ultimately shift market fundamentals, while the metal still remains in a down-channel on the charts.
Palladium finished $4 firmer Monday, settling at $198. On the charts support is seen at $192 and below at $176 with resistance at $212/220.
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