London Gold On Cusp Of $385 Support

Bullion was fixed at $385 an ounce, compared with $385.40 on Friday afternoon and a London close of $385.20/$385.80.

We're right on the verge here. If it goes below it'll go back to the $380-$385 trading range but it it stays above we're still in the $385-$390 range, a dealer said.

Business was very quiet, with little physical demand seen. Dealers said the market was disillusioned by gold's failure last week to rally on strong US jobs data and US-Iraq tension.

I think after the disappointment last week gold has a good chance to go lower, a European dealer said.

 

Dips would encounter interim support at $382.50, and then the important $380 level, he added.

Bids were quoted so far between $385.30 and $384.60.

Chartists noted a bearish downside cross of the 10-day indicator on the 30-day on Friday at around $387. That level would provide resistance on the way up.

William Adams of Rudolf Wolff noted that Comex December gold had broken trendline support at $389.90. A move down to test support at $386.50 seems likely, Adams said in a commentary.

But one dealer noted that gold was technically oversold and may well manage a shortcovering bounce, perhaps to the $386 area, if prices dropped much below $385.

Gold looks horrible, so people are sitting short below the market, waiting to bargain-hunt at the bottom, the dealer said.

On the other hand, there are sell-stops below the market which could take prices towards the $380 area, he added. Silver, indicated down three cents at $5.11/$5.13, was following gold and had more room to try lower, dealers said. But the $5.05 level would provide decent support ahead of the key $5.00 level, they added. Adams of Rudolf Wolff said Comex silver was consolidating with trendline support just above $5.11 and looked slighhtly better than gold.

Platinum was modestly firmer at $393.75/$394.75, up $0.65 from Friday's London close.

It was holding above $393 support despite a test of that level on Friday following a week and a half of drifting lower on a lack of interest in the market.

It may have seen its lows last week, a dealer said.

Palladium was virtually unchanged at $124.50/$125.50.