Tue, Nov 3 2009, 09:34 GMT
by James Moore
London, 03 November 2009 - Markets got off to a volatile start to the week as traders remained cautious ahead of the line-up of economic data and rate announcements however the net result yesterday saw equities and commodities close higher.
The Dow finished with a gain of 0.8% and the CRB Index up 1.15% following positive PMI and home sales data while the improved risk appetite lifted the EUR/JPY cross 0.7%. As a whole currency flows proved mixed though with the Dollar Index closing up just 0.25%.
Equities have turned lower again overnight amidst speculation of a quicker withdrawal of economic stimulus following the RBA’s rate increase. The Nikkei is currently down 2.3% and the broader MSCI Asia Pacific Index off 1.2% after the Reserve Bank of Australia lifted its base rate 25-bp to 3.5%, stating the Asian economic region remains strong and would continue to grow. The Aussy dollar has lost ground as a result of the announcement with AUD/USD currently down 0.7% although the DXY is unchanged after a choppy start.
Gold saw a positive day yesterday, gaining ground as a result of the weaker dollar and stronger equities. The yellow metal regained the $1050 mark in early European trade and pushed to a high of $1062.90 around the time of the PM fix. Profit taking emerged towards the close however gold has posted further gains from its close of $1054.20 in reaction to reports the Reserve Bank of India has purchased 200-tonnes of the proposed 403-t gold sales by the IMF.
Gold has tested to $1066.50 overnight in reaction to the RBI news and could gain further traction as speculation of Central Bank diversification erodes demand for the dollar and fiat currencies. Having seen gold consolidate and with dips continuing to draw strong support gold could be poised to make a fresh challenge to the upside as the RBI purchase announcement clears some of the overhanging resistance.
On the charts support is pegged at $1052/44/32 while clearance of the $1068-71 resistance band would open the way for fresh highs towards $1080-1100.

Silver ran into long liquidation towards the end of the day, closing with a small loss at $16.38 despite the gains seen in gold. The AU/AG ratio hit a 2-month high of 64.6 as a result.
Silver looks likely to hold in the recent $16-17 range as industrial metals lack clear direction but having lost ground to gold and with the yellow metal close to record highs silver could benefit from fresh demand from investors seeking a cheaper alternative to gold.

Platinum and palladium posted modest gains of 0.7% and 0.5% respectively.
Platinum has rallied overnight to a one-week high of $1356 however the PGMs could be in for a mixed week with the release of economic data and US auto sales results.


Published on Tue, Nov 3 2009, 09:38 GMT
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