FX:BULLION MORNING - Gold on the defensive as investors shun big positions
London 10/06/2011 - Gold settled on the sidelines during morning trading in Europe on Friday, as a lack of interest amid continued uncertainty over the eurozone debt periphery, kept investors uncertain of futures moves.
Spot gold fell $2.60 to $1,540.90/1,541.70 per ounce. Gold was the only precious metal to have failed to reach new highs in the previous session, despite a late run-up on inflation concerns.
On the charts, gold managed to close above the seven-day moving average of $1,541 per ounce , leaving the next support level at $1,524.80, while resistance stands at $1,554.
"The short-term range is to hold with key intermediate support at $1,520/$1,517 in dull trading with little action among investors or physical buyers at the moment," broker VTB Capital said.
The dollar continued to strengthen versus the euro - it was last seen at 1.448 - supported by hopes of renewed demand from Asia after positive Chinese trade figures for May.
Meanwhile, the single currency continued to be undermined by continued risk posed by the European sovereign debt crisis. On Friday, Germany voted in favour of a debt restructuring resolution for Greece, which involves additional aid for the country.
After yesterday's comments on inflation, which helped gold higher, ECB president Trichet stressed on Friday his warning that the new EU debt rules were not strong enough. Yesterday, the central bank left its interest rate unchanged at 1.25 percent, although an increase is widely expected next month.
"While ECB president Trichet signalled a rate hike for July, the ECB did not alter its inflation forecast of 1.7 percent for the coming year, suggesting that there would be no aggressive tightening over the medium-term," broker Credit Suisse said.
"We view the low interest yielding environment as supportive for precious metals," it added.
PALLADIUM CONTINUES RACE HIGHER
Palladium prices extended thier race higher, reaching a new three-month peak, while platinum also rose to a new one-month high.
Spot palladium rose $3 to $819 per ounce at one stage, a new best since March 7, before settling at $815/821 per ounce, down just $1. The metal has increasingly touched fresh multi-month peaks over the week, gaining nearly five percent so far on increased demand. Technically, the short-term outlook looks positive, while a close above $825 could open up further gains.
Sister-metal platinum surpassed yesterday's one-month high of $1,847 per ounce by $1 in early trade. It was last seen at $1,834/1,844 per ounce, down $7.
Despite continued negative autosales data for May from major markets like the US, Japan and China over the past two weeks, hopes remain high that future months will see an improvement. Yesterday, China announced the launch of a new "cash-for-clunkers" programme to encourage consumers to buy new cars.
"As many of the old vehicles in China do not have catalysts and most engines in China are petrol-driven, this programme should mean a new real demand, especially for palladium," broker Commerzbank said.
Elsewhere, silver retraced from earlier ten-day highs of $37.87 per ounce to $37.44/37.48 per ounce, down 19 cents.
