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London Bullion Report

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Investors turn to gold, ETF holdings at new highs

Thu, Oct 9 2008, 07:55 GMT
by James Moore

The Bullion Desk


London, 09 October 2008 - Sentiment remained extremely volatile in the financial markets yesterday as Finance Ministers continued to battle against the credit crisis, however gold remained in a bullish mood as safe-haven demand flocked to the market, with gold setting all-time records in Sterling, Euro’s, Swiss Francs, Australian Dollars and Indian Rupees. Holdings in the SPDR gold ETF also reached a record 763.9-tonnes as safe-haven demand emerged. Reflecting the global effect of the crisis the Central Banks of England, Canada & Sweden as well as he ECB and US Federal Reserve announced a coordinated 50-bp cut in order to bolster market liquidity. EUR/USD traded 1.3544-3753 and closed at 1.3646, with US economic data today showing Jobless Claims for the week of October 4th and August Wholesale Inventories. Weaker demand expectations led NYMEX crude to a low of $86.05/barrel with November futures settling down $1.11 at $88.95.

After an initial dip to $878 in Asia gold began to find its feet, climbing steadily once the European session go underway as safe-haven demand intensified. The metal cleared $900 to touch $916.50 where profit taking and technical resistance emerged. Gold pulled briefly back to $898 but quickly reversed course as the rate cut news broke, sending gold rapidly to a high of $922. The metal remained supported above $900 the remainder of the day, closing at $903, however more mixed sentiment has been seen this morning with gold sliding to $884. While yesterdays co-ordinated rate moves may have a greater impact on investor sentiment it seems that we still have a long way to go before conditions begin to stabilize. As a result we expect gold to benefit further from investor safe-haven demand, although in the short-term the metal will remain vulnerable to bouts of cash generating profit taking.

Gold

Silver traded to a high of $12.08 yesterday but struggled to hold ground above $12, closing at $11.67. The metal has seen a steady start this morning and appears comfortable holding above up-trend support line, while successful clearance of $12.12 should enable a challenge to the $13-14 area.

Silver

Platinum saw an initial dip to $950 in Asia before recovering in early Europe as gold rallied above $900. The white metal again stalled at $1010 and closed at $990. The white metal has seen an orderly start this morning and may look to consolidate in the $960-1080 area in the coming sessions.

Platinum

Palladium continued to consolidate yesterday, losing unchanged at $195. Support is seen at $190 with resistance above expected at $216.

Palladium


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