Wednesday 5 August 2009

PRECIOUS METALS: Comex Gold Declines On Profit-Taking

Gold futures gave back some of their recent gains on profit-taking Wednesday, falling in concert with outside markets.

December gold fell $3.30 to $964.20 an ounce on the Comex division of the New York Mercantile Exchange.

"Everything got pushed down this morning," said Jimmy Tintle, analyst at Transworld Futures.

As gold closed, the Dow Jones Industrial Average was around 55 points lower and Nymex September crude oil was down 11 cents to $71.31 but had been as soft as $69.71.

The precious metal's pullback came one day after the December futures hit a two-month high of $972.70.

"When you get a strong four-day up move, you're going to have some kind of profit-taking at some point," Tintle said.

The pullback in gold and a number of other commodities is slightly surprising since there also was a downtick in the dollar, said Dave Meger, senior metals analyst with Alaron Trading.

"It looks like you're going through some profit-taking," he said. "After extending higher across the board in the commodities markets earlier in the day, everything is retracing."

The December futures held nearby support that Tintle put around a breakout area of $960. Technically, he said, traders will be watching Thursday to see whether the market can close above the prior day's peak. Above this, traders also will be keeping tab on a trendline through the February and June highs, which currently passes through the $980 area.

Meger put his support for December gold around $954 to $950, with resistance initially around $970, then $982-$984.

Silver continued its recent trend of outperforming gold. Silver for September delivery gained 6.5 cents to $14.76 a pound.

Silver - like platinum - has tended to outperform gold lately due to its industrial applications and ideas that the gains in equities in recent weeks may signal an improving economy, Meger said.

Meger put support for September silver around $14.45 to $14.40. Initial resistance lies around $14.80, then $15.25.

Meanwhile, October platinum rose $16.30 to $1,293.10 an ounce, while September palladium declined $1.70 to $279.20 an ounce.

Platinum posted a gain due to a combination of supply/demand factors, said a trader.

Demand appears to have picked up lately, particularly due to the popularity of the "cash for clunkers" program that has helped U.S. car sales, he said. The car industry uses platinum in catalytic converters. Meanwhile, there is a supply threat in South Africa, which provides some 70% of the world's mined platinum. Thousands of workers at the country's state-owned power company Eskom could strike early next week after rejecting a wage offer, thereby threatening electricity supplies and as a result output from the country's mining industry.

October platinum hit a $1,296.30 high that was its strongest level since June 5. And while sister metal palladium finished slightly lower, the September futures nevertheless remain technically strong, with a high of $283 that was its most muscular level since September.

Settlements (includes open-outcry and electronic trading):
London PM Gold Fix: $964.50 versus $960.50 on Tuesday
Spot gold at 1:30 p.m. ET: $964.45, down $3.30 from previous day; Range: $958.55-$967.90
August gold: $964.20, down $3.30; Range $961.10-$970.30
September silver: $14.76, up 6.5 cents; Range $14.545-$14.850
October platinum: $1,293.10, up $16.30; Range $1,261.50-$1,296.30
September palladium: $279.20, down $1.70; Range $275.30-$283

-By Allen Sykora, Dow Jones Newswires; 541-318-8765;

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(END) Dow Jones Newswires

August 05, 2009 14:20 ET (18:20 GMT)

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