Next gold next target at $1150, silver at $19

After yesterday's rally in precious metals, we believe that stocks may consolidate today. Equities in Asia are down, and so are the equity futures markets. US Treasury yields are down, signaling reduced risk appetite.

There could be price movements ahead of data releases in the US. PPI, long-term TIC flows and industrial production are on the menu today.

We believe gold remains well supported on the downside. Physical demand is not great, but it remains positive, and is providing good support for gold. At the same time, the dollar has failed to rally significantly on comments by Mr Bernanke that the Fed supports a strong dollar. We see good support for gold at $1,125 and $1,110. Our next target remains at $1,150.

PGM broke through strong resistance yesterday. We remain bullish on PGM; however, platinum has to consolidate above
$1,400 before we would expect more upside. Palladium might encounter strong resistance at $375-$380.

In a surprise move, silver breached $18.00 yesterday. The metal drew strength from gold and base metals. Copper’s move above $6,800 assisted silver and should support silver. We see support at $18.00. A break lower could see the metal test
$17.75. Resistance is at $18.70 and $19.00.

Courtesy: Commodities Research, Standard Bank