Despite a steady start for gold and gains in silver - the metal touched a 12-week peak of $34.53- both metals met with profit taking during US trade, closing the day in negative territory off 0.9% and 1% respectively. The PGMs finished more positively however as supply related jitters helped underpin platinum with both platinum and palladium settling up around 0.8%, there was also evidence of ETF related investor interest as ETF Securities US palladium holdings increased 19.6Kozs and platinum holdings 14.8Kozs; European platinum holdings declined 6.4Kozs. In wider markets investors lacked significant risk appetite yesterday, leading to a mixed day for equities as the Eurozone Stoxx 50 Index closed down around 0.1% while the Dow closed up 0.1% and the S&P500 0.2%. The Euro meanwhile was largely uneventful as caution continued ahead of todays’ ECB rate announcement and ongoing Greek debt talks; EUR/USD closed unchanged, EUR/JPY posted a modest 0.3% gain. The single currency has gained fresh upwards momentum overnight despite the continued failure to agree on debt relief for Greece, with politicians still to agree on sweeping new pension cuts in order to qualify for the $170bn financial aid package. The euro has traded to its best in 8-weeks against the dollar and yen with EUR/USD trading briefly above 1.33. Equities meanwhile have been largely mixed overnight with the Nikkei currently off 0.1% while the MSCI Asia Pacific Index was up 0.1% as Chinese CPI inflation proved higher than expected, increasing from 4.1% to 4.5%, PPI eased from 1.7% to 0.7%. Meanwhile Japanese Household Confidence rose from 38.9 to 40.0; Prelim Machine Tool Orders contracted -6.6%. The line-up of data today includes UK Trade Balance and Manufacturing Production, US Jobless Claims and Wholesale Inventories, the main focus though will be on monetary policy meeting of the Bank of England and ECB; while both are expected to keep rates on hold the BoE is expected to increase its Asset Purchasing facility by £50bn while ECB President Draghi’s speech will be under close scrutiny for sign of further rate cut next month. Light two-way trade has been seen in the precious metals so far this morning with the complex off 0.3% at the time of writing. Market reaction to today’s ECB meeting will drive direction for the precious metals with a surprise rate cut likely to be initially negative for gold. However the background environment of low rates, Geo-political jitters in the middle-east and continued uncertainty over Eurozone debt remain supportive for gold with the yellow metal likely to carry out further base building above $1700 and the 20DMA (1703.7) before looking to challenge overhead resistance around $1764/1783 and $1805.

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