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London Bullion Report

Gold & silver hit new highs as dollar falls

Thu, Oct 8 2009, 07:12 GMT
by James Moore

The Bullion Desk  |  View company's profile


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London, 08 October 2009 - Inflation fears and a weaker dollar continue to fuel bullish sentiment in precious metals over the past 24-hours with gold surpassing the $1050 level while silver has risen to its best in 14-months.

Currency direction was rather mixed Wednesday with the Dollar Index closing little changed. However upbeat data from Australia and Japan overnight have put the greenback under pressure with the DXY currently trading down 0.5% ahead of a busy line-up of rate announcements from the BoE and ECB, economic data including French Trade Balance, UK Leading Index and US Jobless claims & Wholesale Inventories. Speeches from FOMC members and the Fed Chairman Bernanke could also lend direction.

Positive earnings data help boost US equities, which had been trading lower for much of the day. The Dow finished down just 5.6-pts while both the S&P and Nasdaq closed up 0.3%. The positive mood has continued overnight with both the Nikkei and HSI currently up around 0.3%.

Gold got off to a steady start in Asia as two-way trade confined the metal to a relatively narrow range. Fresh bids emerged on the European opening with gold advancing towards the previous days high and eventually pushing through to set a new record at $1048.60. Gold held close to the highs before slipping lower ahead of the US session, trading out the remainder of the day between $1039-45.
The metal has set fresh highs overnight above the $1050 level and given inflationary concerns and dollar weakness the metal could look to test above $1120 during the quarter as investors continue to diversify their portfolios (SPDR holdings increased 8.8-tonnes yesterday), however the short-term outlook is again beginning to look top heavy with gold vulnerable to a correction should the dollar recover lost ground.

Gold

Despite failing to surpass the September 17th high of $17.67 silver outperformed gold yesterday, gaining 0.6% posting a high of $17.58 as the AU/AG ratio closed below 60.0 for the first time in two-weeks.
Silver will continue to look to gold for direction in the coming sessions but having cleared last month’s high at $17.67 the metal will now look to target chart highs from last April/May between $17.92-18.34.

Silver

The bullish tone in gold and silver helped buoy the PGMs with platinum posting a high of $1340 and palladium clearing last months $306 high to hit $316, its best since August last year.
Both metals are steady this morning and could gain further leverage given the strength in other commodities, particularly gold and silver. Resistance above is expected at $1365/1390/1410 and for palladium $330/365.

Platinum


Palladium


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