Gold price as bulls found it difficult to break through the $1,500 level


Overnight there was little movement in the gold price as bulls found it difficult to break through the $1,500 level. A quiet trading session saw the price confined to a $10 range. Resistance was short lived however with a combination of dollar weakness and fresh buying this morning finally propelling gold above $1,500 during London trade.

Fears that the global economic recovery might be in jeopardy, sparked by S&P’s ratings outlook downgrade of the US, have been dispelled by strong corporate earnings results and a steady improvement in US housing data. US Treasury Secretary
Geithner’s assurances that the government was making progress towards a deficit-reducing budget might also have emboldened
markets. He even ventured so far as to say in a television interview that the US would “absolutely” keep its AAA credit
rating. Despite the general sentiment appearing to have shifted to a risk-on stance, precious metals are still managing to gain
ground. Part of this can be explained by resurgent dollar weakness, both against the euro and in trade-weighted terms.
Given that the recent concerns over the global recovery appeared to reignite doubts over industrial demand for PGM (as evidenced
by the divergence in PGM prices from gold), this renewed bout of optimism should provide support for platinum and
palladium today.
Gold support is at $1,494 and $1,485. Resistance is at $1,507 and $1,509.

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