Gold & silver rangebound, platinum steady ahead of Platinum Week

James Moore - Analyst, james.moore@thebulliondesk.com
Friday, May 16, 2008

London, 16 May 2008 - After finding good support during Asian trade the precious metals posted strong gains on the US opening as a rally in the energy sector prompted fresh anti-inflationary hedging. NYMEX crude posted a high of $126.64 before freefalling to $120.75 later in the session due to options related selling. June futures finished the day back at $124.12 and are currently trading up around 85-cents. The dollar saw a mixed trading day yesterday with EUR/USD working between: 1.5418-5546, and settling at 1.5444. Economic data today will show the health of the US housing market with April Housing Starts, and May Consumer Sentiment.

Gold spent the early part of Thursday trading $862-68 as the steadier dollar kept gold under pressure while physical demand provided good support. Aggressive fund buying on the US opening caught shorts off-guard, triggering several rounds of buying as traders covered their positions. Gold quickly rallied to $885, and after a brief pullback to metal touched $887.80 which would be the days high. Gold closed off its highs at $880.75 and has held above $880 this morning due to the softer dollar tone ahead of today's housing data. For now we expect gold to remain capped by technical resistance around $890 and above at $904 while physical demand as well as anti-inflationary investment hedging provide support.

Silver was confined to a 15-cent range in Asia and Europe yesterday, before pushing up to $16.98 on the US opening as gold hit its highs. Unlike gold silver was unable to sustain the gains, reversing back to $16.68 by the close. Silver has made steady gains so far this morning and should find strong technical support below at $16.40/16.00 while the metal still has to overcome the $17-17.24 resistance band before higher levels can be challenged.

Despite platinum staging an initial dip below $2000/oz in Asia the white metal bounced during US trade to post a high of $2086, and closing up $36 at $2070. Again we anticipate the metals fundamentals to provide strong support in the coming sessions with the metal likely to remain in a volatile mood ahead of next weeks Platinum Week activities in London and the release of the Johnson Matthey 2008 Report.

Palladium closed up $2 at $432 yesterday and for now remains comfortable in the $428-42 range.

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