Reply #43: The Bullion Desk - Gold sees weaker start, silver holding $6.40

[54anickel]

http://www.thebulliondesk.com/Content/Reports/Jimmy/Jim...

7th January 2005
Gold fell further yesterday as continued fund liquidation forced the metal through support at the 100-day MA $424.05 despite an unexpected rise in weekly jobless claims which allowed the Euro to hold technical support around the 1.3140 level.

The day started with gold drifting gradually lower during Asian and European trade, slipping from Wednesday’s close of $426.25 to touch $425 as disappointing European business confidence data added further pressure to the Euro. Gold opened in the US at $425.20 but found fresh support in early trade as US weekly jobless claims came in at 364k, well above the forecast 331k, prompting light dollar profit taking. Despite the supported Euro fund profit taking eventually returned across the balance of the session, eventually pressuring gold through the 100-day MA $424.05 and after triggering some light stops fell to a low of $420.25. Gold closed slightly firmer at $420.75 and has worked back to $423 overnight as further dollar profit taking has been seen.

Today’s focus is firmly set on December’s non-farm payroll’s data, which has the potential to change near-term market sentiment, triggering further liquidation which could push gold back towards $418/414 with technical support below seen at $409. Looking beyond that our longer-term view is still positive provided gold holds $409; with the continued US trade/current account deficits and the prospect of further middle-east violence ahead the Presidential election’s in Iraq at the end of the month, increasing the ‘safe-haven’ interest in gold.

Despite silver giving back Wednesday’s gains during European trade, slipping back from $6.50 to $6.40 by the US open traders remained on the bid, quickly lifting the metal back to $6.50. Silver stayed in a mixed mood across the rest of the session, trading $6.40-50, and closing the day on the lows at $6.40.

Silver has tracked gold slightly higher this morning, working back to $6.45 but as with gold further direction will depend largely on the dollars reaction to today’s payroll’s data with support below the $6.40 level is seen at $6.25 while resistance is pegged at $6.60.

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