Tuesday, November 29, 2005


Precious Metals 'Generates Own Momentum'

The Bullion Desk has this morning update. "After flirting with the psychological $500 level over the past few days the yellow metal has finally pushed higher after Japanese investor interest took advantage of the firm close in New York yesterday. The dollar went into retreat yesterday, ending its 3-day winning streak following a drop in US housing sales and rumours of more than one rate hike by the ECB."

"Overnight buying from Japanese investors has driven gold to set a new high of $502.30 and despite pockets of profit taking along the way the metal now looks set to target chart resistance at $503 and $509 as the current bull run generates its own momentum, despite slightly overbought signals. Data from the CFTC yesterday showed significant increases in speculative and commercial positions."

"Silver took its lead from gold yesterday, initially rising in Asia to $8.27 before drifting back in the run up to the US opening, fixing at $8.2675. The industrial precious metal dipped to $8.17 shortly after the COMEX opening but gradually found its feet, rally to $8.35 by the close as fund interest joined the bid."

"Platinum found support from both TOCOM and NYMEX fund players yesterday with NYMEX futures rising briefly above $1000 although OTC spot prices reached a high of $998 just after the AM fix, set at $997. The white metal briefly hit $1002 in Asia this morning but has slipped back towards $990 in profit taking from European traders. Industrial and investment demand will continue to keep prices underpinned in the coming months and further gains are likely to test $1040/1080."

"Palladium found a little support from the movements in gold and platinum yesterday, touching $268 but was overlooked for the large part with traders focusing on the larger markets."

People talk about flight from the dollar causing an increase in the price in gold. But I also believe that an increase in the price of gold will (conversely) cause a flight from the dollar, creating a virtuous or vicious self-reinforcing cycle.

Hopefully that makes just an ounce of sense.
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