London Gold Faces Resistance, Ny Weaker

The bias remained to the upside, but gold faced stiff resistance starting at $388 an ounce and silver was expected to encounter lots of selling around $5.30. Bullion fixed at $387.45, compared with $387.10 on Tuesday, both morning and afternoon.

It's very quiet this morning, but it may this week re-try $388-$390, a dealer said. There's resistance there but maybe not as much as people think. We've already been there recently.

Overnight, gold registered no reaction to the Federal Open Market Committee meeting on Tuesday which ended with no move on interest rates by the US Federal Reserve. The lack of a rate move...came as no surprise. However, the longer it (the Fed) holds raising rates, the greater the risk of an inflationary backlash, said brokers GNI Ltd.

 

But some selling was reported in Japan due to weakness of the yen, as well as possible producer selling from Australia. One dealer also noted a surge of demand for gold from the Middle East on Tuesday after silver's rally to two-month highs. But gold has so far failed to reflect silver's new strength.

Silver was steady, holding on to most of the gains from its chart-driven rally on Monday in New York. It was indicated at $5.21/$5.23, down just one cent from Tuesday's London close. Several dealers said they were looking for silver to make a break towards $5.30, perhaps as soon as this week.

But analysts cautioned it would run into chart selling there after being in a downtrend for most of the year. Further gains depended on a decisive clearance of the key $5.25-$5.26 level. Silver needs help from gold now that it has broken above the $5.15 area, a dealer said.

Platinum, like silver, was barely changed from Monday's London close at $399.25/$400.24.

Meanwhile in New York, Comex and Nymex precious metals futures were slightly lower midmorning yesterday, with the short-term uptrend of the past few sessions losing momentum, traders said.

We saw some trade selling early and most of the locals in the ring now look to be short, one floor trader said. But support may still hold at $392.00 in December gold, while $5.17 is a good number in September silver. Comex December gold was down $0.70 at $392.20 an ounce, traded from $392.00 to $393.00.

Over the past three trading days, gold prices have moved steadily higher, as support at the $388 level (October delivery) was successful in warding off a wave of aggressive selling that hit the market late last week, an analyst said.