The Bullion Desk

London, 10 July 2009 - Bullion prices saw a modest recovery Thursday as Chinese officials at the G8 made renewed criticism of the US dollars dominance as a reserve currency. EUR/USD rallied to 1.4072 at one point while the DXY closed the day down 0.7% with commodities as a whole gaining with the CRB Index up 1.4%. Despite dipping below $60/barrel NYMEX crude settled with a 27-cent gain at $60.41.

Despite EUR/JPY gaining 1.3% US equities could only manage slight gains with the Dow up just 4.7-pts while both the S&P and Nasdaq finished up 0.3%. Asian equities are mixed at the moment with the HSI up 0.1% and the Nikkei down slightly while European futures are signalling a firmer opening. Economic data today will show the US Trade Balance for May and July Consumer Sentiment.

Gold opened close to its lows in Asia yesterday as bargain hunters provided strong support. The metal posted a low of $906.60 before tracking higher as the dollar lost ground. Trade became more mixed above $912 although the metal managed a high of $918.75 shortly before closing at $916.50. With dollar watching set to provide further direction the scale of buying interest towards $900 is encouraging, but with tame inflation readings and ETF and jewellery demand still slack we maintain our bearish short-term outlook.

Silver traded $12.77-13.02 Thursday, closing 10-cents firmer at $12.96. With the metal in an area of more substantial chart support we expect the pace of decline to slow with the metal likely to hold ground around $12.65.

Bargain hunters helped support platinum around $1100/oz yesterday with the metal closing off the lows at $1111. As with gold and silver we would not rule further pressure in the short-term as speculators reduce their commodity exposure however given favourable fundamentals and the possibility of supply disruptions in South Africa we expect substantial declines to be limited.

Palladium found good support ahead of the $230 level yesterday, closing unchanged at $236.