COMEX gold, silver trading down despite weaker dollar

Washington (Platts)--24Aug2005

COMEX gold and silver futures were trading lower Wednesday, despite a
weaker dollar. Traders said gold and silver were generally trading down in
sympathy with the base metals complex.
     Gold for December delivery, the most actively traded contract, was down
$2.80/oz to $441.50/oz, while September silver fell 6.80cts/oz to $6.90/oz,
continuing to trade below its $7 support level. Orders for US-made durable
goods tumbled 4.9%in July, the biggest drop in 18 months, the US Commerce Dept
said Wednesday. The drop in big-ticket items expected to last three years or
more surprised analysts, who on average had been expecting a 1.5% decline
following a revised 1.9% increase in June.
     "It's a general sell off," said a trader. "Gold in particular is
vulnerable to a further sell off because of its huge long open interest. We're
not getting further upside, so they are getting out of their longs. Gold is
also seeing pressure from silver as well."
     According to Barclays Capital, "We continue to see near-term risks
pointing to the downside, with support in the low $430 area. In addition to
the looming risk of long liquidation, the lack of constructive fundamentals
and pressing headlines are also providing little incentive for fresh buying.
Silver's technical picture is looking weak, said Barclays, "and there is
further downside potential ahead of contract rollover next week."
     Meanwhile, the PGMs were trending up slightly. September palladium rose
$1.75/oz at $184/oz, while platinum for October delivery, the most actively
traded contract, was trading up 90cts/oz at $899/oz.
     Platinum remains reasonably bid, said a trader, but had tried
unsuccessfully to breach above $900, and trading continues rangebound at
$885-900. A floor on platinum appears to have formed around previous peaks of
$880, "and this, together with physical demand from China around this level,
is limiting downside potential for platinum," Barclays said, noting that "with
platinum already lurking in the overbought territory, we remain cautious on
further upward movements."
     Palladium also remains fundamentally challenged amid plentiful supply.
"There's no reason for it to go up," said a trader. Barclays noted that gold
and platinum continue to look vulnerable to long liquidation.

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