Gold bullion in Singapore [7] climbed $9.29 to $1230.29 and was on track for a gain of almost 0.8% for the week prior to concentrated and continual selling in London and then on the COMEX pushed gold lower. Euro gold rose to about €960 and continues to consolidate below the €1,000 level.
Friday’s AM fix was USD 1,222.25, EUR 958.70 and GBP 749.11 per ounce.
Thursday’s AM fix was USD 1,210.50, EUR 950.61 and GBP 742.05 per ounce.
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Gold fell to as low as $1212.44 at about 10AM EST on the COMEX. It then bounced higher in late trade and ended with a loss of just 0.3%. Silver was stronger and ended with a gain of 0.63%.
Gold had rebounded on Friday in Asia was was aiming to break a three week losing streak, as equity markets dipped. A higher close for the week would have been technically bullish and could have led to follow through buying next week.
Certain market participants seemed determined not to allow gold to have a higher weekly close. Trading action had all the hallmarks of the Gold Anti Trust Action Committee's (GATA) 'gold cartel' and their determination to keep gold prices capped and "animal spirits" low in the gold market.
In London this morning spot gold was up 0.1% at $1,223.10 an ounce by 0959 GMT and on track for a marginal weekly gain. U.S. gold futures gained $1.50 to $1,223.50 an ounce.
Overhead resistance is now at $1,240 and if the price weakens to below $1,200, it would be expected to test the $1,184 level which is the December 2013 low. The $1,184 level is also a July 2013 low, so is being currently labelled as a ‘triple bottom’.
Below this is the $1,155 price level which is a technically important Fibonacci 61.8% retracement level. Technical levels are important in the commodity and metal markets since various trading strategies take these levels into account when deciding when to buy and sell.
The Fibonacci 61.8% retracement level represents a 61.8% pullback from the entire 2008-2014 upward gold price move which saw gold rose from the $690 area in October 2008 up to above $1,900 in early September 2011, a move of about $1,210.
A 61.8% pullback of this upward move brings the price approximately back to the $1,155 level.
Silver traded very differently from gold on Froday and was 11 cents higher. It was already down significantly for the week so the small gains that were managed Friday meant that silver was still down 1.5% for the week.
On the downside, the $17.27 level is a key technical level since this represents a Fibonacci 78.6% retracement of the entire move up in the silver price since 2008.
The Gold/Silver ratio is currently about 69.7 and could breach 70, which is an important trading level. If this were to happen, it would mean that the silver price should continue to weaken slightly relative to the gold price over the short term.
Palladium is currently trading at $805. After rising above $900 at the beginning of September, the palladium price has now fallen back to its current level very close to $800.
The continued long term move up in the palladium price this year has been made on the back of mining strikes in South Africa and strong industrial demand for palladium in the global automobile market. Palladium is currently trading near its 200 day moving average of 803.
The weakness in the palladium price this week is due to news that Norilsk, the big Russian palladium producer, is in talks to buy $2 billion worth of palladium from a stockpile of palladium that is maintained by the Russian government / Russian central bank. The size of this stockpile is not publicised.
Some of the current supply deficit in the palladium market would be solved if Norilsk was to be able to gain access to the Russian state's stockpile, hence the uncertainty in the palladium price.
If it palladium price makes a move down below the $800 level, it could fall to the March 2013 high of $786. Palladium however, is still in a long term uptrend that began in 2008, but since the price has fallen back from $900 to $800 so quickly, the 200 day moving average near $800 is an important level.
Platinum is currently trading at $1314, near the lows over the last year. The 2013 low, in June 2013, was $1,288 so this is a critical level over the short term. The December 2013 low was $1,311 which has now been breached.
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Palladium was down 2.18% for the week, from $823 at last Friday's London PM close.
Platinum was 2.45% lower compared to last Friday's PM platinum fix price of $1,347 in London.
Momentum remains to the downside and the short term technicals remain poor. We would caution against buying until we see a higher weekly or indeed monthly close.
The lower weekly close yesterday is technically bearish and would make us slightly nervous for next week. However, the fundamentals remain very sound as physical demand is picking up in India and China ahead of festival season. The wider financial and geopolitical backdrop also remains supportive - especially near zero percent interest rates throughout the western world. Dollar cost averaging remains prudent.
by Ronan Manly [10] , Edited by Mark O’Byrne [11]
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