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London Bullion Report

Precious metals set new highs on weak dollar, positive fundamentals

Mon, Nov 16 2009, 10:17 GMT
by James Moore

The Bullion Desk  |  View company's profile


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London, 16 November 2009 - Gold has resumed its bull-run overnight, pushing above $1130/oz as positive economic data from Asia continues to boost investor demand for higher yielding assets. Data showed the Japanese economy expanded by an annualized 4.8%, its fastest pace in over two-years. In addition the Asia-Pacific Economic Cooperation pledged to maintain stimulus measures until there was "durable" growth.

Equities have strengthened after an initially mixed start with the Nikkei currently up 0.25%, the Hang Seng 1.5% while the broader MSCI Index is currently up 1.7%. Meanwhile the dollar is under pressure again, extending its two-week decline. The DXY is currently down 0.15% testing support ahead of a key chart level, which if broken could see the greenback extend lower, potentially giving equities and commodities an additional boost.

Traders will continue to monitor currency movements with economic data today to show EU CPI, US Retail Sales, Empire State Manufacturing Index and Business Inventories. Additional direction could come from speeches by Fed Chairman Bernanke and FOMC members Fisher & Kohn.

Gold saw a steady start Friday, holding ground around $1101.20-10.60 across Asia and Europe and into the US session. The yellow metal regained upwards traction later in the US session as the dollar was put back under pressure again with gold closing at $1116.60 and posting a high of $1119 in after-market trade.
The weaker start for the dollar this morning has seen gold extend its rally overnight, posting a fresh all-time high above $1132, and the metal seems set to extend higher as record low interest rates, inflation concerns, Central Bank purchases and falling mine output draws a broad spectrum of investment demand. We are looking to see if the Dollar Index breaks lower which could push gold above $1150 and on towards $1180. COT data Friday showed a 2.4Mozs increase in gross longs and 2.1Mozs increase in gross shorts in the week to November 9th, as a result the net speculative long increased 0.3Mozs to 31.9Mozs.

Gold

Silver closed Friday at $17.39 after trading $17.04-44.
The industrial precious metal has opened higher this morning and rallied on the back of gold advance this morning, but has again stalled on resistance at the $17.85 level. Further resistance is expected between $17.90-18.11 but given the influx of ETF buying last week silver could start to gain traction as investors look at cheaper alternatives to gold. Fridays CoT report showed NC players reduced both their long and shorts last week while NR players increased theirs. As a result the net long increased only 1.8Mozs to 325.69Mozs.

Silver

Platinum and palladium were both lifted as a result of the gains in gold Friday closing up 2.8% and 2% respectively.
Positive economic data from Japan overnight and speculation ahead of the release of JM’s Interim Report tomorrow have lifted both metals to fresh multi-month highs this morning and both could continue higher as their fundamentals remain favourable.
CoT data for the week of November 9th showed a 40.3Kozs increase in platinum net speculative long and a 23.1Kozs increase for palladium.

Platinum


Palladium


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