London Bullion Report
Precious metals extend gains as inflation hedges increase
Wed, May 7 2008, 06:38 GMT
by James Moore
The Bullion Desk
London, 07 May 2008 - Yet more gains in the energy sector drew fresh demand to the precious metals yesterday as investors again sought to offset inflationary pressures. NYMEX crude futures touched a record $122.73/barrel and closed up $1.87 at $121.84. The Euro also provided background support as the dollar was sold off on a spate of worse than expected quarterly results. EUR/USD posted a high of 1.5593 but settled off its highs at 1.5524. US economic data today will show First Quarter Productivity and Pending Home Sales & Consumer Credit for March.
Gold held in a steady mood as trade got underway in Asia yesterday, posting the days low of $871 as physical demand again provided strong support. Resistance at $875.50 capped the metal till the start of European trade as fresh demand pushed the metal to just short of $880. Profit taking caused gold to slide back to $872 on the US opening however with oil pushing up to fresh highs and the dollar under pressure gold rallied, reaching a high of $882.95 before easing back to close at $877.50. With supply disruption continuing to push oil to higher levels gold looks set to benefit from further inflation related hedging in the short-term, while strong physical demand helps provide a strong base. Having tested above $880/oz yesterday the yellow metal should now find resistance at $888/893 before challenging $900 while scaled down support is found at $876/868/860.

Taking its direction from gold silver traded to a high of $17/oz during yesterdays US session before easing back to $16.82 by the close. The industrial precious metal closed back above key up-trend line support yesterday and with momentum, indicators turning higher the metal should look to challenge initial chart resistance at $17.04/17.29 before $17.74-85.

Platinum bargain hunters built on Monday’s recovery back above $1900/oz with the white metal rallying to $1964 during NYMEX trade. Platinum closed up $34/oz at $1958 while overnight platinum futures have traded limit up on TOCOM while profit taking has been seen in the OTC market. Positive market fundamentals should continue to provide strong support while the increased risk of inflation is likely to draw further investment demand towards platinum as well as the rest of the precious complex. On the charts support is pegged at $1914/1885 while clearance of resistance at $1972 should enable platinum to reclaim the $2000/oz level.

Palladium gained $10 yesterday, closing at $428. Further gains would lift the metal back into the $430-55 trading band.

Published on
Wed, May 7 2008, 06:57 GMT
Archive
- Gold & silver rangebound, platinum steady ahead of Platinum Week
Published On Thu, May 15 2008, 06:36 GMT
- Precious metals finish lower as dollar firms
Published On Wed, May 14 2008, 06:38 GMT
- Softer oil reduces anti-inflation demand for gold, platinum off highs
Published On Tue, May 13 2008, 08:40 GMT
- Gold capped by chart resistance, platinum drifts on profit taking
Published On Mon, May 12 2008, 08:13 GMT
- Oil triggers inflation demand for gold, platinum up on ETF speculation
Published On Fri, May 9 2008, 10:08 GMT
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