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London Bullion Report

Consolidation continues as metals look for direction

Mon, Nov 10 2008, 10:44 GMT
by James Moore

The Bullion Desk  |  View company's profile


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London, 10 November 2008 - Fallout from the previous weeks rounds of rate cuts, and economic and political headlines saw the precious metals confined to a day of range trade Friday, although the PGM’s were again buoyed by bargain hunter interest during European trade. Equity markets and the currencies reflected this mood with the Dow gyrating between 8800-8900 for the much of the day while EUR/USD closed just a few pips higher at 1.2746. Meanwhile, recessionary fears weighed further on the energy sector with NYMEX crude dipping below $60/ barrel at one point, although recovered to close at $61.04. More consolidation as well as headline watching is likely to feature this week following the call by G20 officials for more rate cuts over the weekend, while China unveils a $586bn stimulus package. Economic data from the US is light this week with traders likely to focus on the Retail Sales and Consumer Sentiment readings, due Friday.

Gold saw an initial dip to $726 as trade opened in Asia however this proved to be the days low as the metal recovered back to $735 by the time trade opened in Europe. Despite further buying interest the metal struggled for traction, posting a high of $744.90 and trading out the remainder of the day in a $10 band between $732-42. While the scale of support found ahead of $720 is encouraging the yellow metal continues to stall on overhead resistance at the $765 level, and as shown by the jump in NC shorts in Friday’s Commitment of Traders report, gold is again looking vulnerable to another test back to the $685-700 area.

Gold

Silver closed at $9.98 Friday having traded between $9.94-10.32. As with gold silver has also been struggling to conquer overhead resistance and may look to test support at $9.24/9.00 should the metal dip below $9.70.

Silver

After an initial dip to $813 in early Asia, platinum posted a strong rally in Friday’s European session, reaching a high of $873 before stalling. The metal drifted lower across the remainder of the day, but closed up $25 at $852. Platinum continues to consolidate having broken out of the steep down-channel on the charts, in place since mid-July. But, with gold and silver showing signs of slippage the white metal is at risk of another test lower in the coming session, potentially dragging the metal back below $800/oz.

Platinum

Palladium tested to $230 as platinum rallied to its highs, but reversed during NYMEX trade to close at $222. While palladium has made positive upside movement over the past week the metal still remains overshadowed by the weakening economic picture and will remain, as do other industrial metals, vulnerable to further bouts of selling pressure.

Palladium


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