Gold
Gold was up $1.40 to $887.20 per ounce in trading in New York Friday and silver was up 19 cents to $16.85 per ounce. The London AM Gold Fix at 1030 GMT this morning was at $892.25, £449.04 and €569.36 (from $883.50, £446.51 and €566.38 Friday).
Gold has risen marginally in Asian and early European trading on the back of near record oil prices and the dollar falling versus the euro and other currencies. The surge in oil price on Friday after reports of a naval incident raised tensions between the U.S. and Iran which should help support gold at these levels. There were also problems in Nigeria and in the North Sea.
The Iranian naval incident is a reminder if one were needed that geopolitical risk has not gone away, remains as prevalent as ever and should remain to the forefront of investors' minds.
Gold tested support at $880, close to the early April lows of $870 last week, and was supported at those levels. After last week’s sharp sell off there is a risk that should gold close below $880 we could retest previous resistance at the 1980 nominal high of $850 per ounce.
This WeekIt’s a busy week in terms of key events in the U.S., with the Fed’s interest rate announcement on Wednesday likely to take centre stage. A cut of 25 basis points is expected. While the decline in the U.S. housing markets and economy is deepening and the economy could do with the full 50 basis points, the Federal Reserve may be belatedly realising that soaring inflation internationally is now a real risk and an inflationary spiral could result if they continue to print money with wild abandon.
On the U.S. data front, this week sees advance Q1 GDP, as well as the manufacturing ISM, Conference Board’s Consumer Confidence, ADP employment and non-farm payrolls reports for April. With results from bellwethers such as Microsoft and UPS disappointing last week, expect volatility and risk aversion would be advised.
Investors Pull Out of Mutual FundsEarly signs of how the financial crisis and turmoil in markets is affecting the investment industry was seen in the fact that all but one of the 25 largest U.S. mutual fund managers saw their long-term assets fall in the first quarter, as returns dived and investors pulled out of funds. In the worst start to a year for more than a decade, most money managers had retail outflows. The FT concluded that the trend suggests the credit turmoil is unnerving mainstream investors and could dampen consumer spending in coming months.
Further U.S. Bank Failures This comes as there is increasing concerns re U.S. bank failures which could rise above “historical norms” as a weakening economy puts pressure on badly underwritten loans, particularly in commercial real estate. This is according to John Dugan, who oversees about 1,700 national banks as comptroller of the currency. His comments, in an FT interview, come as U.S. banks report big spikes in reserves for expected losses on consumer and small business loans, reflecting the spread of the credit crisis from Wall Street to the broader economy.
http://www.research.gold.org/prices/daily/ Prices to Watch$848 – Support 22nd Jan and Resistance previously 8th Nov
$871 – Support of the April lows
$954 – Resistance from 21st Feb, 26th Mar and 17th Apr
SilverSilver is trading at $16.94/16.99 per ounce at 1200 GMT.
PGMsPlatinum is trading at $1963/1973per ounce (1200 GMT).
Palladium is trading at $437/443 per ounce (1200 GMT).
