By Leon Westgate
Gold has recovered after coming under pressure late-on Monday, boosted by the weaker dollar. After the sharp decline seen late last week, Monday essentially saw gold find its feet and consolidate its position.

Dollar weakness this morning has since taken over however, seeing prices rally strongly heading into the afternoon, with gold breaking through nearby technical resistance at $1,075.

A doubling in Chinese passenger car sales in January has helped support the industrial metals and the PGM’s. Sales of passenger cars came in at 1.32 million units while total vehicle sales, including busses and trucks, came in at 1.66 million units.

The surge in auto sales was stronger than anticipated and is due partly to continuing government subsidies for rural residents buying cars, and for consumers trading in old models.

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While not being able to totally offset lingering weakness in auto demand elsewhere in the world, continuing strong sales growth in China should nevertheless help to underpin PGM prices going forward.

In terms of prices, palladium has rallied strongly this morning, after treading water yesterday; the metal has broken through nearby resistance at $415.

Palladium now looks set to test the next resistance level at $425. Key support remains at $385. Platinum has also rallied this morning, but is lagging behind palladium and appears to be struggling to push significantly above $1,490. Resistance for platinum remains at $1,495.

China Investment Corp. (CIC) - China’s Sovereign Wealth Fund - has reportedly taken a 1.45 million-share stake (around 0.4%) in the SPDR Gold Trust ETF. The stake is worth around $155.6 million.

In terms of scale, compared to CIC’s $300 billion size, the investment is relatively modest; however, it shows a continuation of the fund’s strategy during the second half of 2009, which, according to reports, saw it divert around $10 billion into commodity-related concerns.

Courtesy: Standard Bank

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