London, 04 January 2010 - Markets closed out 2009 in an upbeat mood as equities and commodities continued to benefit from the improving macro-economic outlook. The Dow posted a gain of 18.8% while the CRB Index rallied 23.5% as individual commodities such as copper surged 140% and sugar 130%. The precious complex enjoyed a solid year with palladium the largest gainer - up 123% - closing the year above $400/oz. Platinum was in second place, up 62% and silver came third gaining 48%. Gold continuing its 9-year bull-run, gaining 24.6%, and was the biggest gainer over the decade, rising 281% compared with platinum’s 232% and silvers 216%. Palladium was the only metal to buck the trend posting an 8.25% decline over the noughties.
Positive manufacturing data from China has given equities and commodities a lift overnight with the Nikkei currently up 1% and the broader MSC 0.7%. Data showed the HSBC Manufacturing PMI increased to a seasonally adjusted 56.1 in December from 55.7. Oil prices have risen after Russia halted oil supplies to refineries in Belarus, NYMEX crude is currently trade up 0.9%. Rate speculation has supported the dollar so far this morning with the DXY currently up 0.1% ahead of data showing EU and US Manufacturing PMI and US Construction Spending. FOMC Member Duke is also due to speak.
Gold has been straddling the $1100 level so far this morning and in the short-term will continue to look to the dollar for direction however good demand has been seen below the $1090 level and we expect investors will remain dip buyers, increasing their exposure as a way to offset devaluation of fiat currencies and take advantage of improving fundamentals. Physical demand is also expected to pick-up in the run up to Lunar New Year celebrations with chart support pegged at $1090/1076.
Silver remains fair value to gold however the metal has struggled to clear resistance above $17.50 in recent sessions and is at risk to a deeper correction as technical chart indicators begin to turn bearish. A failure to hold support at $16.75 could see a test back to the $15.75-16.11 area.
Both platinum and palladium closed 2009 looking to challenge higher, fuelled by solid investment demand and improving economic outlook and auto sales. Speculation ETF products could soon begin trading in the US has also boosted the metals in recent sessions and could add significant price direction given the level of interest in gold and silver funds listed in the US. Further chart resistance is anticipated around $1495-1510 in platinum and $422/36 in palladium however both metals could gain further traction on the release of tomorrows US auto sales data.
