Daily Gold Update

Source: Keiron Greenhalgh, BridgeNews

London— Spot palladium reached fresh four-month lows of U.S. $742.50 per ounce through the European morning Monday. Buyers were noticeable by their absence this morning, sources said. Platinum reached a four-month low of $572.50 as it came under selling pressure, sources said. Gold also eased, reaching a five-day low of $261.00 (bid). Silver traded flat around $4.38-40 in thin conditions.

Palladium continued its downward trend of recent days to reach a fresh four-month low of $742.50, and is now 32.5% off its Jan. 23 high. �Conditions are more aptly characterized at present by consumer resistance, in anticipation of lower prices yet, rather than hefty sales volumes,� one source said.

�Buyers have pulled orders, people are looking to see how far this (decline) will go,� another said. Spot metal fixed at $750.00, compared with $774.00 Friday morning.

Platinum also traded down to four-month lows. The losses have been sustained as a result of sentiment turning on its sister metal�s decline, but also because of new sales, sources said.

Spot metal breached the 200-day moving average�at $584.25 this morning�on its way down, and the next important support level is $570, sources said.

Resistance at the $570 level was seen in February 2000 and again in late May-early June 2000 in spot metal�s climb to the January highs. Spot metal fixed at $578.50, compared with $599.00 Friday morning.

Gold traded softer through the European morning on follow-through selling, sources said. Spot gold had dipped in Asia as selling emerged, extending the losses Friday in the U.S. market. Spot metal fixed at $261.85, compared with $263.35 Friday morning.

�The market is drifting rather than being sold down, and there is still talk of the possibility of a short covering rally in New York as April positions fall due�although this may be somewhat optimistic,� Canaccord Capital�s Rhona O�Connell said in her morning comments.�The latest CFTC figures show that the short position of late February was reduced by roughly one-quarter over the week to last Tuesday, the day in which prices hit their recent peak,� she added.

The non-commercial net Comex short position decreased from 66,731 lots to 50,795 lots between Feb. 20 and Feb. 27 respectively.

�In the Asian physical market, demand is re-surfacing, but New York trading today is likely to be significant, given that the spot market is hovering around important support between $261 and $262. A look below these levels is by no means out of the question,� O�Connell said.

Prospector Asset Management�s Leonard Kaplan said: �We absolutely need to hold the $260 price support level. If we do, then some hope of a price recovery remains. If not, then we will see a quick retest of the lows.�

Silver traded sideways through Monday morning between $4.38 and $4.40.

The outlook is weak, sources said, and tests of the downside to around $4.36–the Feb. 27 1995 low�are expected near-term.