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London Bullion Report

Precious metals struggle as Euro and equities hit new '09 highs

Thu, Oct 15 2009, 07:52 GMT
by James Moore

The Bullion Desk  |  View company's profile


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London, 15 October 2009 - Continued dollar weakness and positive earnings data further bolstered investor risk appetite yesterday as equity markets set fresh highs for 2009 with the Dow reaching the 10,000 mark for the first time in a year. The S&P500 and FTSE set new highs, as has the HSI overnight while the Nikkei is currently up 1.5%. Commodities were also generally upbeat with gold and silver posting fresh highs before running into long liquidation. The CRB Index gained 0.7% and NYMEX crude for November finished up $1.03 at $75.18/bbl. In contrast the dollar continued in the opposite direction with the DXY ending down 0.6% while the greenback has hit fresh multi-month lows against various counterparts, including the Euro, A$ and Swiss Franc. Economic data today will see the release of the ECBs monthly report, EU and US CPI, Philly Fed and Empire State Manufacturing Indexes as well as a speech from ECB President J-C Trichet.

After an initially mixed start gold found its feet, tracking the Euro higher to set a new life-time high of $1071 shortly after the start of European trade. Despite the dollar remaining under pressure gold failed to extend higher, drifting back on profit taking across the rest of the European session and trading out the remainder of the day between $1058-65.
Weak dollar fundamentals and rising equity and risk sentiment continue to paint a supportive backdrop for further gains in the precious metals but having risen $60 in almost a straight line gold appears to be running out of steam and while we wouldn’t rule out fresh highs in the immediate future the metal would benefit from a period of consolidation to enable the metal to sustain recent gains.

Gold

Silver set a new multi-month high of $18.11 yesterday but backed off soon after to close little changed at $17.87.
Two-way trade has been seen so far this morning but with gold struggling against profit taking and silver chart momentum indicators turning lower the metal may look to consolidate between $16.75-17.35.

Silver

Platinum was relatively rangebound yesterday trading between $1348-65 and closing unchanged. Palladium was in a similar mood posting a $10 range between $322-32.
Both metals are little changed so far this morning and will be looking to gold and silver for direction in the coming sessions.
On the charts upside resistance is seen at $1390/1410 in platinum and between $330-65 in palladium with support below pegged at $1316 (20DMA)/1300 and $305/290.

Platinum


Palladium


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