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Gold hit again in Asian, support found ahead of $500 - London Bullion Report
15th December 2005
The precious metals complex continued its corrective phase yesterday with all the metals closing lower after persistent selling from investors and funds was seen throughout the day. The dollar was also under pressure yesterday, mostly as a result of the change in wording in the FOMC’s statement Tuesday but also due to an unexpected widening in the Trade deficit in October to $68.9bn against expectations of $63bn. As a result the greenback settled at 1.1997 against the Euro while the Yen raced to 116.74 before closing at 117.41. Today is a big day for data with the line up including the Consumer Price Index for November, expected at -0.3%, Industrial Production and Capacity Utilization for November, December NY Empire State Index as well as Weekly Jobless claims for the week ending December 10th. Oil prices also lost ground yesterday after a surprise increase in US inventories with NYMEX crude for January closing at $60.85/bbl.
GOLD
Gold came under pressure early Wednesday as Asian traders; particularly those on TOCOM appeared on the offer following the exchanges decision to increase margins. The yellow metal soon dipped to the $512 area with TOCOM futures trading limit down before seeing a light bounce as the Japanese Tankan data was released. Further buying kept gold supported around $512 as trade opened in Europe although renewed offers later in the session gradually eroded the support with gold dipping to $510 during early US trade. Despite this gold held up till the last hours trade when funds emerged on the offer, causing gold to drop to a low of $505.40 before closing at $506.50.
Gold has again dipped overnight, largely through selling from TOCOM traders with prices on the exchange trading limit down again due to largely one-way traffic. Good support has been seen around $502 though and should keep gold above the $500 level. The real test will be to see if COMEX funds decide to sell again with a break below $500 potentially targeting the $485 area.
SILVER
Silver slipped in Asian trade as the industrial precious metal followed the movements made by gold. Good support emerged around $8.40 however; keeping silver underpinned and prompted a bounce to $8.55 during COMEX trade before sliding back to $8.38 by the close due to the pressure in gold.
Despite further pressure overnight silver continues to find support around $8.35-40 which is keeping the metal underpinned and with the RSI now back at 54 the metal looks far more settled from a technical view. I think silver will hold around the $8.40 level in the coming session although traders will be keeping a close eye on the gold market with a dip below $500 likely to trigger further liquidation.
PGM
The PGM’s were also under pressure yesterday with both platinum and palladium trading steadily lower across the day. Platinum lost almost $30, closing at $961 while palladium finished $10 lower at $260. The pressure has continued this morning with platinum trading limit down on TOCOM and touching $940 in the OTC market while palladium has slipped to $250. The rapid fall in the PGM’s has now knocked platinum’s RSI down to 37 from 68 at the start of the week and is an indication the correction is a little overdone. However with TOCOM longs still struggling to find sufficient liquidity there could be more downside movements before prices recover.
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