Gold Down For Third Day on Profit Taking, Oil Weakness and Dollar Strength

Gold

Gold fell marginally yesterday and has fallen for a third day in a row. Gold’s hesitation and weakness is likely due to renewed dollar strength, oil weakness and profit taking after gold’s recent sharp rally. Market participants will be nervous about another disappointing report on the housing market later today.

Gold is currently trading at $1,215.75/oz, €964.12/oz, £789.19/oz.

Gold in USD – 5 Year (Daily)

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A rise in risk aversion has seen weakness in Asian and European equity markets. The Nikkei has fallen overnight back to levels seen in May 2009 and has entered bear market territory after its recent 20% fall.

Concerns about the health of economic recovery is has seen benchmark German bunds fall to new record lows at 2.24%. However, Germany’s deficit rose sharply to 3.5 percent of economic output in the first half of 2010 (putting it on track to break EU budget rules) which could affect bund prices. Especially if the problems of peripheral EU economies such as Greece begin to affect the core German economy.

Oil in USD (WTI Crude) – 5 Year (Daily)

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Oil prices back at $72 a barrel due to economic concerns is allaying inflation fears but the geopolitical risk of Iran could see oil supported at these levels. The recent fall in the oil price could be contributing to gold’s recent weakness.

Silver

Silver is currently trading at $17.84/oz, €14.15/oz and £11.58/oz.

Platinum Group Metals

Platinum is trading at $1,488.50/oz, palladium is at $474/oz and rhodium is at $2,050/oz.

Mark OByrne

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