Gold prices remained relatively range-bound yesterday

Gold prices remained relatively range-bound yesterday, largely as a result of the absence of US participants celebrating the Thanksgiving holiday. In Asia, there was some support for silver in the form of short-covering, while some two-way interest in gold was evident but overall activity remained lacklustre.

Weakness has begun to creep into markets as the mood once again has swung towards “risk-off”. Asian equities ended the day down, and European stocks are currently under pressure. Gold are suffering under a resurgent dollar, with electronic trading exacerbating the losses, especially for gold. Despite the price fall in gold this morning, we still haven’t seen any significant physical demand coming through. However, as we’ve seen in the past, this buying usually emerges below the $1,650 level, which should then limit further downside. Markets are vulnerable to erratic moves as trade activity remains quite thin (with US participants at best only coming in for half
the day, and many away for a long weekend), and Eurozone uncertainty keeps investors jittery.

Nevertheless, we would view any downside in gold as a buying opportunity, given our long-term view that the metal will push higher in 2012. From a cost-of-production perspective, platinum is good value at current levels below $1,550. Gold support is at $1,677 and $1,675. Resistance is $1,692 and $1,704.