BULLION MORNING - Gold, silver benefit from one-month high in euro vs dollar, PGMs pause

London, 16 September 2010 - Gold and silver were around their intraday peaks in European trading on Thursday morning after a slow and little-changed start, benefitting from strong euro gains against the US dollar.

The platinum group metals, meanwhile, eased from multi-month highs to trade sideways.

Spot gold rose $5.20 to an intraday high of $1,273 per ounce at one stage, just $1.90 lower than Tuesday’s all-time high of $1,274.90. The metal paused in the previous session but is braced for further advances.

On the charts, upside resistance is seen at $1,275-$1,280 and then at $1,290-$1,300. From there, the $1,290-$1,300 range will offer some decent resistance.

"Prices... may continue to advance on speculation that the dollar will continue to decline after the [Japanese government’s] yen intervention," John Meyer at Fairfax said.

The euro rose to a one-month high just shy of $1.31 on strong technical picture and after a Spanish bond auction produced average yields on 10-year and 30-year Treasury bonds that were lower than in the past.

The dollar also remained frail against the yen, with Tokyo's intervention to weaken the yen on Wednesday coming sooner and more aggressively than many market participants had expected.

Yesterday's Empire State manufacturing index and industrial production numbers out of the US were disappointing.

Despite gains in the euro, European shares fell after negative economic data out of the UK - retail sales volumes fell last month for the first time since January.

But the eurozone trade surplus widened in July to 6.7 billon euros from the prior surplus of 2.2 billion euros, revised down from 2.4 billion euros.

Later today, the attention will focus on the regular weekly initial jobless claims, the Philly Fed business activity and producer price inflation figures at 13:30 BST.

Among other precious metals, silver mostly followed gold’s gains and equalled yesterday’s best since March 17, 2008 at $20.67 per ounce, with the next target still seen at the 28-year high of $21.36 reached on that day. It was last quoted at $20.61/20.66 per ounce, down just two cents.

Elsewhere, platinum and palladium eased back after hitting multi-month highs in the previous session, with some light selling seen overnight on Japanese exchange Tocom.

Platinum stood at $1,599/1,604 per ounce, down $9 from the close - it hit the highest since May 20 at $1,611 yesterday.

Palladium also fell $8 to $548/554 per ounce, after reaching a four-and-a-half month peak of $570 in the previous session.

Some profit-taking was also confirmed by a 20,000-ounce redemption in the US palladium exchange-traded fund (ETF) yesterday, the first change in holdings since the end of July and the lowest since May 20 at some 732,000 ounces.

(Editing by Mark Shaw)

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