The dollar fell sharply against most currencies yesterday and gold was strong in all currencies and held above $1,015/oz for most of the day.
Both the London AM and PM fixes were higher from the day both in euro and pound terms (21-Sep-09 AM $999.25,£618.233, €681.756, PM $997.00,£616.307, €680.871 and 22-Sep-09 AM $1015.75,£622.396, €686.550 PM $1,014.00,£620.639, €686.109 – http://www.lbma.org.uk/?area=stats&page=gold/2009dailygold). Thus, while the pound and dollar have fallen against the euro, they have fallen by even more against gold.
The recent London fixes at comfortably over $1,000/oz,£600/oz and €680/oz show that physical demand remains significant. Gold needs to show more stamina and will need to move up to, and hold above, its recent high of $1,023/oz in order to herald a move to new record highs. If it does not, a correction could be expected, albeit likely short term before a fresh assault on new highs. With so many analysts and investors expecting a sell off, the market is liable to do the opposite of what is expected by the majority. With investment demand remaining robust, any sell off is likely to again be short and shallow. Our own, and other bullion brokers’ experience in recent days, is that investors, particularly smaller ones, are taking profits and there are more sellers than buyers at these levels. Unfortunately, retail investors tend to be on the wrong side of the market. Rather than waiting for perfect entry points, astute investors will cost average in to positions and gradually assume a position over a period of weeks.
Silver is trading at $17.18/oz and is trading as a stubborn mule refusing to go down. The silver market smells different and a short squeeze and spike to over $20/oz before year end remains possible – especially as the big picture supply/demand fundamentals remain compelling. The record high of $50/oz remains a viable price target in the coming years. As ever the analysts remain overwhelmingly bearish on silver and silver remains a true contrarian’s dream with little or no public involvement and negative or no media coverage.
Platinum group metals
Platinum is trading at $1,331/oz. Palladium holdings surged overnight pushing the metal through $300/oz and it is currently trading at $302/oz. Rhodium is at $1,575/$1,675/oz.