-- Posted Thursday, 10 January 2008 | Digg This Article | Source: GoldSeek.com
Gold Gold reached new record highs yesterday and closed up $1.80 at $879.30 in New York (from previous day's close in NY). Silver was up 4 cents to $15.72 per ounce. Gold has eased somewhat in Asian and early European trading and the London AM Fix was at $874.25 (up from $887.85). Gold has also eased from new records in many major currencies. At the London AM Fix gold was trading at £445.23 (down from £452.15 yesterday) and €595.50 (down from €603.53 yesterday).
Gold will likely get direction from the dollar which has shown tentative strength and oil which has been volatile but remains at elevated levels. Traders will be focussing on the ECB interest rate decision and Bernanke's speech this afternoon. With Merrill Lynch and Goldman Sachs now saying the U.S. is in or about to be in a recession, Bernanke's words and outlook will be keenly listened to. Also the U.S. jobless claims number will be eagerly awaited in order to assess the extent of economic slowdown despite an inflationary environment.
The Bank of England has left interest rates unchanged at 5.5% suggesting that despite a sharply weakening property market and economy the BoE is concerned about inflation and the rapidly falling pound. The committee is charged with keeping inflation at 2% but it is currently running above target - 2.1% - thanks to oil prices soaring to $100 a barrel, as well as rising food costs.
Despite rising physical demand globally and gold's status as a safe haven currency being realised internationally again (in particular in China, India and the Middle East), world gold production continues to decline which is extremely bullish (see below).
Support and Resistance
While gold's fundamentals remain very sound in the medium to long term, in the short term we may be overbought and thus we could experience a healthy short term correction. Support is at previous resistance at around $840 to $850, below that at the 50-day moving average at around $815.97. Momentum remains with gold and the $900 mark could be reached. The fact that many analysts and traders are now expecting a pullback could be a contrary indicator and gold could rally to $900 prior to a correction. Gold Supply Continues to Fall Gold output in South Africa, the world's largest producer, fell a significant 12.7 percent in volume terms in November compared with the same month the previous year, official data showed on Thursday. In October, year-on-year gold sales fell 2.8 percent to 3.29 billion rand. Further indication that gold production may have reached the point of peak production. Production is also falling in other major producers such as Canada and Australia despite the rise in gold prices.
Silver Silver has surged and rallied to $15.56/15.58 at 1130 GMT.
PGMs Platinum was trading at $1540/1544 as per above (1130 GMT). Palladium was trading at $372/377 an ounce (1130 GMT).
Oil Oil is marginally up in European trading and NYMEX light sweet crude oil (FEB08) was trading at $94.91 a barrel.
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