London, 28 October 2009 - Disappointing consumer confidence data and caution ahead of Thursdays US GDP release led investors to further par their risk exposure Tuesday however markets appeared more stable compared with Monday with the Dow closing up 0.1% and the CRB Index virtually unchanged; the dollar finished marginally firmer, up 0.1%. In the precious complex gold closed little changed while silver proved more volatile, closing down 2.7% while both platinum and palladium lost 1.2%.
Equities have traded lower again overnight following disappointing earnings results while the Yen has strengthened against both the Euro and dollar. Markets are likely to remain volatile in the coming sessions as traders and investors continue to assess the global economic picture.
Data overnight has shown Australian inflation in line with expectations while data later will show German preliminary CPI, US Durable Goods and New Home Sales.
Gold tested initially higher Tuesday as the dollar lost ground against the Euro. Gold traded to $1043.80 before slipping lower again as the dollar turned higher with the metal remaining under pressure the remainder of the day. Gold set a low of $1032.60 in reaction to the consumer confidence data but recovered to close at $1038.
Mixed flows were seen in the US gold ETFs yesterday with 1.2-tonnes cut from the SPDR fund and 0.9-tonnes added to the iShare. Gold has been straddling the $1040 level this morning and is likely to remain vulnerable to dollar/equity related weakness in the short-term, however the metals more measured decline suggests economic uncertainty and inflation fears will continue to draw scaled down investment demand. Further chart support is expected at $1032/1030.50 and below at $1020.
Silver continued to lose ground to gold, closing down 2.7% at $16.58 while the AU/AG ratio closed at 62.14 compared to Mondays 60.86.
The metal has seen a steady start this morning but will be vulnerable to further weakness short-term should support at $16.60 fail.
Platinum and palladium both finished down in the region of 1.2% at $1317 & $328 respectively. Despite the price correction ETF Securities recorded solid inflows adding 6.1Kozs of platinum and 12.5Kozs of palladium.
Two-way flows have been seen in both metals so far this morning but remain at risk to further pressure in the short-term, although given the improving economic picture and favourable fundamentals we expect dips to find good support. Chart support below is pegged at $1305/1270 in platinum and back towards the $320 area in palladium.
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