Palladium sinks in thin European trade, gold steady - London Bullion Update


4th July 2005
While gold, silver and platinum have been in consolidation mode after Friday’s push lower, palladium has run into trouble trading to a 2-year low as fund selling failed to find significant support in today’s holiday market. The dollar today has held in a strong mood, touching 1.1894 against the Euro as data from the EU today showed expansion in the service sector slowed to 53.1 in June from a 7-month high of 53.5 in May.

With the US market closed today for the Independence Day celebrations gold has been extremely quite, trading around $427 and fixing this afternoon at $427.40, just $0.40 lower than this morning.
The yellow metal is still extremely vulnerable to further downside pressure as the dollar shows no sign of slowing its advance. Support below is pegged around $422-25 while rallies back above $430 are likely to meet further selling for the moment.

Silver has managed to post some light gains despite the slow market conditions. The industrial metal fixed earlier at $6.91 which marks the high for the day.
Silver is still very reliant on speculative interest to determine the metals direction with traders likely to pay close attention to the movements of gold and the base complex over the coming sessions. Silver is likely to find resistance on the way back towards $7 while further pressure could push the metal back to the 400-day MA at $6.73.

Platinum has seen an uneventful day today, fixing $2 lower this afternoon at $870. Palladium on the other hand has been extremely active as traders struggled to find sufficient buying interest as fund offers emerged. Palladium has traded as low as $165 but has fixed firmer this afternoon at $173, a fall of $4 from the AM fix.
With a supply surplus in excess on 1m/ozs palladium is still very much the weak link in the precious metals complex. The white metal has held out well considering the scale of fund/speculative liquidation carried out over the past 6-8 weeks, however, further dollar led consolidation within the whole of the metals sector could easily push palladium to the $148 level tested in April 2003.

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