FXS: Gold & silver hold near key resistance, palladium sets fresh 2010 high
London, 01 April 2010 - Sentiment across the metals sector remained broadly upbeat yesterday with aluminium hitting a two-month high while tin, nickel and palladium hit their best since 2008 as weak US jobs data and month/quarter-end squaring pressured the dollar. Despite the gains in metals and crude oil, after US inventories declined, the CRB Index closed down 0.15%.
EUR/USD gained over 0.6% yesterday and has hit a one-week peak of 1.3560 this morning after the Bank of Japan’s Tankan report increased from -24 to -14. EUR/JPY posted a more substantial 1.4% increase as risk appetite rose although some profit taking has emerged this morning with the pair currently down 0.2%. In addition to the weaker dollar caution due to the end of the Fed's bonds and mortgage-related securities buy-back programme yesterday saw US borrowing rates increase with US$ 3-month Libor climbed to a six-month high.
Weaker dollar sentiment also weighed on US equities yesterday with the Dow settling down 0.5% and the S&P500 0.3%. Equity markets are in a more positive mood this morning though with the Nikkei and MSCI Asia Pacific Index currently up around 1.4% following the Tankan report, strong Chinese Manufacturing PMI and fresh asset allocation at the start of the new quarter. Other economic data today will show German Retail Sales, US Jobless Claims and EU, UK and US PMI.
Gold tracked steadily higher across Wednesday’s Asian and European sessions as the dollar weakened. The rally steepened on the US opening with gold pushing to a high of $1118.25 before running out of steam, trading out the rest of the day between $1112-17. Silver closed up 1.7% at $17.55, holding on a par with gold.
Light two-way trade has been seen this morning and players are likely to remain cautious ahead of tomorrow’s NF-Payrolls, although only a muted reaction may be seen with many centres closed for Good Friday. For the moment we expect dips to remain well supported however failure to conquer resistance around the 100-Day MA ($1120) could triggering a re-test of recent support around $1085. Similarly silver is struggling to conquer overhead resistance between $17.43-66. A break could open the way to challenge $18 while a failure would likely re-test the $16.55 area.
