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London Bullion Report

Silver & platinum open weaker, seen vulnerable short−term

Mon, Jun 22 2009, 06:49 GMT
by James Moore

The Bullion Desk  |  View company's profile


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London, 22 June 2009 - The dollar continued to lend direction to the precious complex Friday with the metals holding ground in their recent ranges. Sideways trade was seen in most sectors with the CRB Index finishing the day 1.5% lower.
NYMEX crude futures for August ended the day down $1.89 at $70.02/barrel. Newswire over the weekend have been full of M&A news following the proposal by Xstrata to merge with Anglo American.

Currency trade again proved choppy as traders showed caution ahead of this weeks FOMC meeting with the EUR/USD trading around 1.39-1.40 while the DXY found further support ahead of the 80-level, closing with a modest 0.4% decline. Equities were in a similarly listless mood with the Dow closing down 0.2% and the S&P500 up 0.3%. This week’s plentiful line-up of economic data should give markets a clearer indication of global economic health although the focus is likely to be the Fed’s rate announcement, and perhaps more importantly the tone of the statement and whether we see signs of impending fiscal tightening. Equities remain steady this morning with the Nikkei currently up 0.9% and HSI up 2.5% despite the World Bank downwardly revising its world growth forecast from -1.7% to -2.9%.

Gold failed to react negatively to the Senate approval of the US Military Supplemental Bill, holding ground in the $930-40 area. The yellow metal posted a low of $931 on the Asia opening and a high of $939.20 in the latter part of the US session, closing just $1.20 higher at $935.20. The dollar looks set to provided further direction to the precious complex this week and given the scale of economic data due for release as well as the Fed rate announcement the metal may move out of it consolidation phase. While good support has been seen around and below the $930 level we still see gold at the most risk to test lower as physical demand remains slack and institutional investment demand stagnant. COT data from showed a 1.4Moz reduction in the Non-Commercial net long as gross longs declined 6% and short increased 4%.

Gold

Silver closed Friday unchanged at $14.22 after trading $14.14-39. The industrial precious metal has opened in a softer mood this morning, testing down to $14 with the AU/AG ratio at its highest in a month. While the metal will continue to broadly track gold the scale of stale longs and absence of investment demand suggests the metal could test back to the $13.64-90 area. Friday’s COT report showed the NC net long fell almost 5% in the week of June 16th, correcting from a 10month high as reductions were seen in both gross longs and shorts.

Silver

Platinum closed with a slight gain Friday having spent the day trading $1204-17. The white metal has tracked silver lower this morning, testing below $1200 and as with the rest of the complex the metal appears vulnerable to a deeper correction, potentially testing below recent support around $1190 back to the 100-DMA ($1130).

Platinum

Palladium finished up $7 at $247. For the moment further chart support is expected ahead of the 40-DMA at $235.80 with resistance above pegged at $252/260.

Palladium


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