London 14/08/2012 – Precious metals rebounded slightly on Tuesday morning after better-than-expected European GDP figures sparked hopes that the embers of the global recovery continue to glow
Gold rose marginally alongside risk assets and the euro but remained rangebound. It was last quoted at $1,615.42/1,615.59 per ounce, up $5.62. Yesterday, the metal lost ground for the first time in seven sessions, dipping to a low of $1,607.45.
“The gold price is refusing to budge; admittedly it is still holding its own above the psychologically important $1,600… but it seems unable to push much above this level,” Commerzbank said in a note.
Their view was shared by FastMarkets analyst William Adams: “Gold prices have been oscillating sideways within a triangle – they have struggled and failed to overcome overhead resistance but seem well supported. On balance, we favour the upside but the market seems in no hurry to get more directional just yet.”
Resistance remains in place at $1,626, he added. A move above this level is likely to spark a short-covering rally towards $1,641.
In data released so far today, second-quarter GDP growth in Germany at 0.3 percent beat a forecast of 0.2 percent but was below the previous quarter’s 0.5 percent. France’s reading of 0.0 percent was higher than the expected -0.1 percent.
In the UK, CPI, core CPI and RPI all came in above forecast for July but HPI undershot. ZEW economic sentiment for the EU and for Germany for August disappointed, as did EU industrial production for June at -0.6 percent, in line with the previous month but below a forecast of -0.5 percent.
EU flash GDP for June was in line with forecast at -0.2 percent, below the previous month’s reading of 0.0 percent.
Yesterday, Japanese data showed preliminary second-quarter GDP growth at 0.3 percent, below the expected 0.6 percent and the previous quarter’s 1.2 percent. The country is still in deflation, with prices falling 1.1 percent in the second quarter.
In currency markets, the euro outperformed the dollar. It was last at 1.2374/1.2375, up more than a third of a cent. The dollar index, meanwhile, lost 0.16 to 82.26.
In other commodities, the Brent crude benchmark receded from its three-month high above $115 set on Monday triggered by tight North Sea supplies and fears that Israel may attack Iran, bringing more instability to the Middle East. It was last quoted at $114.03/114.08 per barrel, up $0.71 on the close.
GOLD/PLATINUM RATIO RETREATS FROM HIGHS, VIOLENCE SPARKS PGM SUPPLY CONCERNS
The rest of the complex followed gold higher, with the platinum group metals – which are highly dependent on industrial uses – outperforming.
Platinum gained $17.50 to $1,403/1,409.50 per ounce, taking it more than one percent higher and outperforming gold four-fold. This meant that the gold/platinum ratio, which had hit an all-time high at 1.1604 on Monday abated somewhat – it was last at 1.1551.
Still, platinum prices remain under pressure despite concerns over supplies from major producer South Africa, where miner Lonmin confirmed that production had been severely disrupted since Friday – when a strike sparked outbreaks of violence