London Bullion Report: Gold supported by bargain hunters, copper capped by technical resistance ahead of key growth data

London, 29 July 2010 - A combination of thin conditions and a decline in Durable Goods dented investor risk confidence Wednesday, weighing equities lower as European markets dipped into negative territory in the latter part of the day while the Dow and S&P500 closed down 0.4% & 0.7% respectively. Commodities proved more resilient however; the CRB Index closed up 0.65% as strength in grains, softs and base metals offset a 0.65% decline in crude oil and a flat day for gold. Currency flows were mostly mixed as the Dollar Index and EUR/USD closed unchanged; EUR/JPY finished down 0.4%.

Equities have come under further pressure this morning with the Nikkei currently down 0.6%; however the MSCI Asia Pacific Index is up 0.2% with European futures indicating a firmer start for most markets. The Euro has opened in a positive tone this morning, currently up 0.35% against the dollar and yen after Japanese Retail Sales increased from 2.9% to 3.2%; EUR/USD is holding above 1.30 having traded just shy of Tuesday's two-month high; the DXY is off 0.3%. The health of the US and Eurozone jobs sector will be under the spotlight today with German Unemployment Change and US Initial Jobless Claims, expected at -18K and 457K respectively.

Gold saw quite an orderly day Wednesday following recent volatility, trading in a $10 range between $1155.60 & $1166.20. The yellow metal closed unchanged at $1161.50; silver struggled, dipping to a 7-week low of $17.34 and settling down 0.85%. Platinum finished up 0.3%, palladium settled unchanged. Data showed an 18.5-tonne fall in SPDR holdings yesterday however gold has gained ground this morning on a mix of physical and investment bargain hunting. Given the reduction in speculative/investment stale longs in recent weeks and with technical indicators nearing oversold investors may view current levels as a good buying opportunity, however we wouldn't rule out a test of the 200DMA ($1150.20).

Reassurance of China's economic outlook led the base complex higher in early trade Wednesday with copper hitting a 12-week high of $7213, while aluminium, lead and zinc hit their best in two-months. Trade turned more mixed as equities weakened and durable goods declined; copper finished up 1.2%, aluminium and tin both gained 0.5% while lead and zinc gained 2.2%; aluminium finished down 0.4%. The complex has seen a muted start this morning with traders opting to sit on the sidelines ahead of tomorrow's GDP reading; the key for the market will be on coppers ability to conquer resistance around the $7200 level, which if cleared would enable a push towards the $7500 area.

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