US legislators passed the much disputed $700bn rescue bill late on Friday but markets are not convinced of its ability to revive gridlocked credit markets, said a report by Standard Bank.
While US inter- bank lending rates have declined, they’re still extremely high, it said. Despite authorities’ efforts, banks remain suspicious of counterparties’ ability to honour financial obligations.
Scepticism around the rescue plan is also being demonstrated by Asian equities having fallen sharply this morning, the report said. The Nikkei was down more than 4%, followed by the Hang Seng at 3.5%. US equity futures have lost more than 1.5%, possibly signalling another red day in US equity markets.
Global fears continue to translate into high demand for US Treasuries at the expense of other assets. The main beneficiary have been the USD which has gained ground from $1.3850 to as low as $1.3605 against the euro.
“We expect this trend to continue if the Europe and the US track Asian markets later today,” said Standard Bank’s commodity analyst Walter De Wet.
On the data front, Friday’s US non-farm payrolls, which declined by 159,000 which was much more than the estimated forecast decline of 100,000 adds to the list of negative data.
“Faced with a stronger dollar, PGM and silver will see little support. We estimate the average PGM basket price currently at $847/oz. While the market is currently more concerned about demand, persistent low prices would put many mines in financial difficulty,” said Walter.
Walter also mentioned that the yellow metal is still dithering and with investors unwilling to commit to major positions on Friday, gold traded erratically at $845/oz-$825/oz.
After finding some support early in Asia, which pushed gold from $830/oz to $845/oz, gold lost its direction as the dollar drifted around $1.383. A series of sharp spikes followed when US markets opened, but gold remained stuck at $825/oz-$845/oz. It closed at $828.5/oz on Friday, and held up well in the aftermarket after the rescue plan was passed, reflecting the lingering concerns in financial markets, said the report.
“Primary support is at $821/oz, and secondary support at $807/oz and $803/oz. Resistance is at $848/oz, $861/oz, and $888/oz,” said Walter.
The report mentioned that silver initially found solid support in Asia as it gained $0.65, to trade at $11.40/oz, before it stabilized in Europe. Renewed buying support in New York saw the metal shoot to $11.70/oz, just to subside again when gold lost steam. Silver ended the week at a bid of $11.25/oz.
“Primary support is at $11.00/oz and secondary support at $10.88/oz-$10.70/oz. Primary resistance is at $11.65/oz, and secondary at $12.00/oz,’ said Walter.
Platinum remains under pressure; on Friday, trade was choppy. The metal failed to break above $1,000/oz, bouncing between $950/oz and $980/oz. With the stronger dollar, platinum could remain under pressure today. It closed at $955/oz on Friday.
Palladium is holding up well despite platinum’s move lower. Although the metal dropped to $195/oz on Friday, it managed to claw its way back in New York and closed at $198/oz. Rhodium lost $60/oz, to fix at $3,210/oz in New York, it said.
While US inter- bank lending rates have declined, they’re still extremely high, it said. Despite authorities’ efforts, banks remain suspicious of counterparties’ ability to honour financial obligations.
Scepticism around the rescue plan is also being demonstrated by Asian equities having fallen sharply this morning, the report said. The Nikkei was down more than 4%, followed by the Hang Seng at 3.5%. US equity futures have lost more than 1.5%, possibly signalling another red day in US equity markets.
Global fears continue to translate into high demand for US Treasuries at the expense of other assets. The main beneficiary have been the USD which has gained ground from $1.3850 to as low as $1.3605 against the euro.
“We expect this trend to continue if the Europe and the US track Asian markets later today,” said Standard Bank’s commodity analyst Walter De Wet.
On the data front, Friday’s US non-farm payrolls, which declined by 159,000 which was much more than the estimated forecast decline of 100,000 adds to the list of negative data.
“Faced with a stronger dollar, PGM and silver will see little support. We estimate the average PGM basket price currently at $847/oz. While the market is currently more concerned about demand, persistent low prices would put many mines in financial difficulty,” said Walter.
Walter also mentioned that the yellow metal is still dithering and with investors unwilling to commit to major positions on Friday, gold traded erratically at $845/oz-$825/oz.
After finding some support early in Asia, which pushed gold from $830/oz to $845/oz, gold lost its direction as the dollar drifted around $1.383. A series of sharp spikes followed when US markets opened, but gold remained stuck at $825/oz-$845/oz. It closed at $828.5/oz on Friday, and held up well in the aftermarket after the rescue plan was passed, reflecting the lingering concerns in financial markets, said the report.
“Primary support is at $821/oz, and secondary support at $807/oz and $803/oz. Resistance is at $848/oz, $861/oz, and $888/oz,” said Walter.
The report mentioned that silver initially found solid support in Asia as it gained $0.65, to trade at $11.40/oz, before it stabilized in Europe. Renewed buying support in New York saw the metal shoot to $11.70/oz, just to subside again when gold lost steam. Silver ended the week at a bid of $11.25/oz.
“Primary support is at $11.00/oz and secondary support at $10.88/oz-$10.70/oz. Primary resistance is at $11.65/oz, and secondary at $12.00/oz,’ said Walter.
Platinum remains under pressure; on Friday, trade was choppy. The metal failed to break above $1,000/oz, bouncing between $950/oz and $980/oz. With the stronger dollar, platinum could remain under pressure today. It closed at $955/oz on Friday.
Palladium is holding up well despite platinum’s move lower. Although the metal dropped to $195/oz on Friday, it managed to claw its way back in New York and closed at $198/oz. Rhodium lost $60/oz, to fix at $3,210/oz in New York, it said.
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