London Bullion Report
Dollar weighs on gold despite record oil, physical demand strong
Thu, May 8 2008, 07:57 GMT
by James Moore
The Bullion Desk
London, 08 May 2008 - Despite further gains by oil the precious metals ran into profit taking yesterday as the dollar firmed amid improved US economic outlook. EUR/USD closed at 1.5388 and has traded lower this morning to 1.5284 ahead of interest rate setting meetings of the ECB and Bank of England. US economic data today will show Jobless Claims for the week of May 3rd and Wholesale Inventories for March. Tight fundamentals pushed NYMEX crude to a new high just short of $124/barrel. June futures touched $123.93 before closing at $123.53 with a gain of $1.69/barrel.
Gold opened in a steady mood yesterday as physical demand provided good support around $875. The yellow metal began to track lower once trade got underway in Europe with dealers looking to the EUR/USD cross for direction. The move gathered pace as stops were triggered below $874, pushing gold to $867 before falling to a low of $863 during US trade. Bargain hunters prevented further weakness with gold closing back at $870.15, and good support has been found at $865 so far this morning ahead of today’s interest rate announcements. Given the importance of today’s rate meetings the dollar seem set to provided much of the days trading direction, while the start of Akshaya Tritiya celebration in India should see physical buying provide background support. On the charts gold is still capped by a down-trend-line resistance around $879.50 which is preventing the metal regaining $900 while support is expected at $861/858/850 and $847.

Silver tracked gold lower yesterday, posting a low of $16.46 shortly before settling at $16.65. The RSI currently stands at 40, suggesting the metal is neutral; although the metal has edged lower this morning to test trend-line support at $16.42. A breach of the trend-line could trigger a move back to the April 1st low of $16.30 or the May 1st/2nd lows around $16/oz.

Initial profit taking led platinum to ease back to $1926 before bargain hunters emerged to take advantage of the dip, lifting the white metal back to close unchanged at $1958. Strong demand from industrial and investment players, coupled with tight fundamentals continue to provide good support, lifting the metal to $1970 this morning. Clearance of chart resistance at $1972 should trigger a rally back to $2000 while support below should be found at $1965/1940 and $1924.

Palladium closed down $8 yesterday at $420 remains in the $416-30 area.

Published on
Thu, May 8 2008, 07:59 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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