London, 19 November 2008 - Range trade continued in the precious complex yesterday as traders again assessed the latest round of economic data and comments from US treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke. In addition the PGM’s were keenly awaiting the release of the Johnson Matthey Interim Report, which painted a not so gloomy picture for the market. Sideways trade was also witnessed in the currencies yesterday with EUR/USD trading at 1.2567-2699 while the US Dollar index finished virtually unchanged. Economic data today will show Housing Starts and CPI for October. Weakening global growth outlook again weighed on energy prices yesterday with NYMEX crude finishing below $55/barrel at $54.39.
Gold again looked to the dollar and equity markets for direction Tuesday with the yellow metal again holding ground above $720/oz, posting a low of $731.40 shortly after the US opening and a high of $746 later in the session. Gold closed at $734.25 and has edged up towards $740 this morning.
For now gold is likely to remain in the current $720-765 range however converging chart lines suggest the metal could be brewing for a break-out, the big question is which way? Overall the trend is still to the downside, and the big jump in Non-Commercial shorts would support this view, but physical demand is still robust and Central Bank purchases have been back in the newswires this morning with China thought to be mulling a 4000-tonne increase in reserves. While we still maintain a bullish outlook long-term the lack to traction above $750 does make us think we could see one last wash-out down towards $650 before year-end.
Silver posted a 60-cent range yesterday dipping to $9.15 in early US trade before bouncing later in the day back to $9.76. The metal closed at $9.55 but having been hard hit over the past few months is does appear as if the metal is turning a corner with further support expected at $9.20/8.80 while resistance at the 80 level for the AU/AG ratio suggests a bounce is pending.
Platinum recouped lost ground yesterday and has bounced 2.6% this morning following the release of the JM Interim Report showing robust auto-sector demand and a supply deficit of around 240,000/ozs. The metal has also been bolstered by reports that Lonmin - number-3 producer - is planned to cut production and investment as a result of lower metal prices, and is further evidence the metal is oversold following is aggressive correction since July, and is good value for those with longer-term views.
Palladium finished $3 lower at $214 yesterday. Further support is expected at $205 with resistance anticipated at $224/235.
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