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Gold & Silver Move Higher, "Deepen Consolidation" Ahead of Long Easter Weekend

Commodities / Gold and Silver 2010 Apr 01, 2010 - 10:46 AM GMT

By: Adrian_Ash


Best Financial Markets Analysis ArticleTHE PRICE OF GOLD rose to a two-week high vs. the Dollar on Thursday morning in London, gaining as the US currency also rose on the forex market and global equities pushed towards fresh 18-month highs.

US oil contracts also rose to their best level since Oct. 2008, breaking above $84.60 per barrel.

"Sporadic bargain hunting was seen in gold" but precious metals volumes were light overall according to one Hong Kong dealer.

"Silver fixes higher in Europe, gold firms," says Reuters for the third day running.

Completing its fifth quarterly gain in succession last night, the gold price in Dollars today pushed higher to $1124 an ounce.

For Euro and British Pound investors, gold ended March with a new monthly closing high above €825 and £736 an ounce respectively.

Silver prices moved up to a new 10-week high, just shy of $18.00 an ounce.

"Gold took another shot at its downward sloping trendline on Wednesday," notes one London dealer in a technical analysis today, "but it failed below that resistance level and resumed its consolidation pattern."

"There is a trend-line off the March highs that comes in at $1121," agrees the latest technical outlook from bullion bank Scotia Mocatta. Citing "main support" at $1085, "the price formation from these two lines shows gold moving deeper into a triangle pattern...consolidation formations that tend to resolve in the direction of the trend."

Ahead of tomorrow's Good Friday holiday in the markets – when the latest Non-Farm US Payrolls data will be released – the US today reported the fifth consecutive week of falling new jobless claims.

Unemployment remains "unacceptably high", however, said Treasury secretary Timothy Geithner in an interview.

US Construction Spending fell less sharply than analysts expected in Feb., while manufacturing sentiment in both the US and UK improved faster than forecast in March.

London's gold and silver market – heart of the world's physical bullion dealing – will remain closed on Easter Bank Holiday Monday.

"The supply-side of the global economy has responded well to monetary and fiscal stimulus," writes Walter de Wet at Standard Bank in his Commodities Daily, and "is increasingly being supported by recovering demand.

"Much of the growth in final demand is coming from Asia, China in particular, but the US is also showing sings of growth, more so than Europe.

"We therefore increasingly favor palladium over platinum, and we also favor crude."

Looking at the make-up of current gold demand, "Since December there has been an outflow from physically-backed gold ETFs," notes the latest Commodity Weekly from French bank Natixis, "and a substantial drop in sales of gold coins in the Western world."

Compared with the record levels of early 2009, gold coin sales by the US Mint have fallen 30%. The UK's Royal Mint reports a 50% drop. Sales from the Austrian mint are down 80%.

"With the gold price no longer rising at the pace experienced last year, we expect patterns of demand to shift away from 2009's concentration upon investors back towards jewelry fabrication," concludes Natixis.

Over in India, meantime – home to the world's largest private gold demand – the price of gold ticked higher as "retailers want to stock up for the wedding season," according to a one Mumbai wholesaler.

"Everyone expects gold prices to be lower, close to 16,000 [Rupees per 10 grams, down from 16,445 today] before purchasing more," said one private bank dealer to the Economic Times. "But that seems unlikely as the wedding season will run for the next two months and demand will keep prices higher."

India's spring wedding season will culminate across southern states with the "auspicious" gold-buying festival of Akshaya Tritiya in early May.

By Adrian Ash

Gold price chart, no delay | Free Report: 5 Myths of the Gold Market
Formerly City correspondent for The Daily Reckoning in London and a regular contributor to MoneyWeek magazine, Adrian Ash is the editor of Gold News and head of research at , giving you direct access to investment gold, vaulted in Zurich , on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2010

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

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