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London Bullion Report

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Gold set to extend gains

Wed, Nov 4 2009, 09:32 GMT
by James Moore

The Bullion Desk


London, 04 November 2009 - Divergence was seen in markets yesterday as equities stalled while both the dollar and commodities gained with gold hitting a new record of $1088/oz. The Dow closed down 0.2% and the S&P500 up 0.2% as traders appeared cautious ahead of todays Fed announcement and employment report. In particular players will focus on the wording of the Feds statement especially its inflation expectation. Interestingly both the dollar and commodities closed higher with the Dollar Index up 0.2% and CRB Index 1%.

Glimmers of light from Octobers US auto-sales results and positive banking and mining results have bolstered Asian equities overnight. GM reported its first monthly sales increase in 2-years and Ford recorded a 3% rise - possibly adding further bullishness to commodities. Currently the Nikkei is up 0.4% and the broader MSCI Index up 1.9%. In the currencies the dollar has edged lower this morning - the DXY is currently down 0.2%, and the EUR/JPY higher, a suggestion of increased risk appetite ahead of the Fed.

Gold traded initially higher in Asia yesterday before turning lower as the dollar gained, slipping from $1065 to $1055.50. The metal held in the $1056-64 area for the remainder of the European session and into US trade before strong bids emerged. Gold rallied initially to $1070 and quickly pushed on to $1080 as stop-loss order were triggered. The metal remained bid the rest of the day posting a high of $1088 shortly after the end of floor trade.
While gold is vulnerable to long liquidation the RBI purchase news yesterday could give rise to further diversification into gold in the coming sessions as investors shy away from the dollar and fiat currencies and turn towards physical/physically backed assets.
Gold looks poised to post fresh highs into the $1080-1100 area.

Gold

Silver closed with a gain of 3.5% in reaction to the surge in gold with the AU/AG ratio closing below 63.
Silver could be brewing for a larger bounce in the coming sessions as new highs in gold increase demand for silver as a cheaper alternative to gold. Overhead resistance is pegged at $17.40/17.90/18.11.

Silver

The PGMs saw a choppy day Tuesday. Platinum traded between $1322-60 and palladium $318-28.
With gold and commodities as whole pushing higher and US auto sales appear to have bottomed the PGMs may look to challenge recent highs at $1371 & $340.

Platinum


Palladium


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