Fri, Oct 10 2008, 07:16 GMT
by James Moore
London, 10 October 2008 - Cash generating long liquidation weighed on the precious complex for much of Thursday, with gold drifting back to $880. However the Dow’s collapse below 9,000 triggered aggressive buying in the after-market session, propelled the metal to $925/oz, and has left the metal well placed for an end of week grand finale. Global equity markets staged an initially bullish reaction to Wednesday’s co-ordinated rate cuts however a further tightening of borrowing rates and pressure from the banking sector led the markets heavily into negative territory with the Dow closing down 678.91-pts or 7.3%, and the rout has extended overnight with the Nikkei and Hang Seng Index’s falling over 7%. EUR/USD traded 1.3580-3784 across Thursday although the dollar has traded higher overnight from its closing level of 1.3628. Economic data today will show the US Trade Balance for August. Oil prices have also taken a heavy hit amidst falling demand expectations. NYMEX November futures finished down $2.36 at $86.59 and have dipped to a one-year low this morning of $82/barrel.
Gold began to drift lower once trade opened in Asia, finding initial support around $900 before slipping to $890. Further pressure emerged on the European opening however gold was able to stabilize above $885 for much of the day despite dipping to a low of $880.25 in early US trade. The Dow’s slump triggered a surge of buying interest in the after-market session with gold running quickly to $925 from its closing level of $885, and the metal has touched $927.25 this morning.
Bouts of cash generating long liquidation will continue to slow gold’s upside progress however the metal should continue to benefit from investor safe-haven demand (SPDR holdings reaching a new record of 765.74-tonnes), and with today being Friday we could see gold extend those gains as investors try and factor some safe-haven protection ahead of the weekend. Technical resistance is expected at $927, but once cleared the metal should move quickly to challenge $940 and $968 above.

Despite initial pressure in Asia silver held in a steadier mood across the rest of the day, although the metal struggled to regain $12/oz. Given the bullish tone in gold this morning silver may look to challenge chart resistance at $12.19/12.55, allowing a challenge to the $13-14 area.

Platinum ran into resistance at the $1000 level in Asia before rally during European and US trade.
The white metal reached a high of $1037 and has held above $1000/oz this morning. Good support has been seen below $980 from both industrial and investment sources and with momentum indicators turning higher the metal may look to break its current down-trend. But, with the metal shifting back towards a supply surplus and with investment demand greatly reduced we are unlikely to see the record levels set earlier in the year.

Palladium finished $5 higher yesterday, settling at $200. Support is seen at $190 with resistance above expected at $216.

Published on Fri, Oct 10 2008, 07:19 GMT
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