Gold Breaks Resistance and Succumbs to Profit Taking

Gold
Yesterday, gold jumped to $1,169/oz in Asia before falling in New York, it then recovered to close with a small gain of 0.11%. It range traded from $1,150/oz to $1,157/oz in Asian trading this morning. Gold is currently trading at $1,154/oz and in euro and GBP terms, it is trading at €847/oz and £750/oz respectively.

Gold has come under pressure today but has risen from the lows of the day at $1,147.80/oz. After gold reaching a 4-month high at $1170 an ounce yesterday, it was due a pullback and a period of consolidation may be necessary prior to any further gains. After multi-month gains some profit taking is to be expected and financial markets await key US earnings data.

Technically, gold looks well after taking out resistance between $1150/oz and $1160/oz and looks set to challenge the December 2009 record highs. Gold has reached multiyear and all time record highs in euros, pounds, yen and other currencies (see charts) and given the strong technicals and fundamentals may soon replicate that performance in dollars.

Gold – 8 Months (Daily). Click on image to view full size.

Silver
Silver has range traded from $18.06/oz to $18.20/oz this morning in Asia. Silver is currently trading at $18.10/oz, €13.31/oz and £11.80/oz.

Platinum Group Metals
Platinum is trading at $1,718/oz and palladium is currently trading at $516/oz. Rhodium is at $2,825/oz.

Click on image to view full size.

News
Soros Fund Management LLC increased its investment in SPDR Gold Trust, the world’s largest exchange-traded fund for the metal, by 152 percent in the fourth quarter. Soros Fund Management LLC manages about $25 billion. Soros believes gold will be the biggest bubble of them all.

Inflation in Germany, Europe’s largest economy, was the highest for 15 months in March, driven by a spike in energy and fuel costs. Inflation on a 12-month basis was 1.1% and on a monthly basis, prices rose by 0.5%. The main reason for the jump was a rise in the cost of heating oil (up by 32%) and fuel (up 19.4%). Food prices also rose for the first time since March 2009, albeit by a marginal 0.3%.

The Spanish government has been working hard to avert a crisis similar to Greece’s. Spain has one of the biggest unemployment problems in the developed world and its government is trying to bring about labour market reform to tackle it. Yesterday, the Spanish government presented its ideas to the social partners, and they hope to agree a deal by the end of this month. A top Spanish official said Monday that Sunday’s agreement on details of a Greek bailout package showed the euro zone won’t allow the default of a member nation. "It shows the unanimous decision of the European Union, and especially the euro zone, to support financial stability, and it leaves no room for the hypothesis that a euro-zone country could ever default," Diego Lopez Garrido, secretary of state for European affairs, said Monday.

China’s foreign exchange reserves rose to a new high of $2.447 trillion (£1.59 trillion) at the end of March, figures from the central bank showed. It was a 25pc increase on the same period a year ago, and a rise from $2.399 trillion at the end of December. Chinese officials are on record regarding diversifying out of dollars and into tangible assets, other currencies and gold.

Click on image to view full size.

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Mark OByrne

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