Gold

Gold finished trading in New York yesterday at $927.70, up $1.30 and silver was up 8 cents to $17.40. Gold rose slightly in Asian trading before falling. It fell slightly in early trading in Europe but remains above yesterday’s close.

Financial and Economic Crisis Deepening as House Prices Continue to Fall

With the credit, financial and economic crisis clearly deepening as warned of by the IMF yesterday, gold will likely remain firm in the coming sessions due to continuing safe haven demand.

There appears to be strong support for gold at the $910 to $920 level due to the confluence of macroeconomic factors.

The IMF warned yesterday that credit losses could surpass more than $1 trillion and that financial markets remained fragile with no end in sight to falling property prices.

Merril Lynch yesterday warned regarding further losses for Lehman Brothers in the next quarter and announced a further $5.7bn of its own writedowns linked to the sale of toxic mortgage securities. Also two more large regional banks have collapsed and being taken over by the Federal Deposit and Insurance Corporation’s (FDIC).

As predicted by some, the credit crisis is now moving up the “value chain” from the subprime market to credit card markets and worryingly it is now spreading into the prime mortgage markets.

Given the deteriorating conditions outlined by the IMF, gold’s safe haven status will likely see it reaching $1,200 per ounce prior to year end.

Today’s Data and Influences

With housing and its effects on the consumer still a key driver of equity markets, today’s consumer confidence and Case-Shiller house price index will be closely watched and bad figures could result in weakness in equity markets and in the dollar.

Gold and Silver

Gold is trading at $929.20/929.80 per ounce (1045 GMT).
Silver is trading at $17.46/17.50 per ounce (1045 GMT).

PGMs

Platinum is trading at $1761/1768 per ounce (1045 GMT).
Palladium is trading at $389/395 per ounce (1045 GMT).