LONDON (Commodity Online): Risk appetite continues apace. While we see growing down side risk to gold, the amount of liquidity flowing to precious metals is likely to limit any sell-off.

Of note is the substantial decline in the correlation between precious metals and the US dollar in recent days (the dollar has been trading around $1.4900 against the euro for the past few days). We doubt this correlation will remain low, and a weaker dollar should continue to support precious metal prices.

Upside for gold is still limited. We continue to see scrap gold entering the market. AT the same time, there was also some ETF gold selling.

ETF Securities reported selling of 8.06m oz on Friday. While we do not expect large-scale ETF selling, there is clearly some resistance in the gold market at the moment. As a result, we do not advise adding any new long positions. A correction towards $1,020-$1,030 could be a buying opportunity. Support is at $1,040 and $1,030, with resistance at $1,060.

Platinum and palladium continue to find good buying support. Both metals have managed to hang on to their recent
gains. We expect this trend to continue. However, we do note that the speculative length in both metals is very high, which
could see a correction in both metals.

This correction may be triggered by a correction in gold. As a result, and as with gold, we do not advise adding new longs at current levels. However, any break lower should be bought. Platinum support is at $1,330 and resistance at $1,360. Palladium support is at $326 and resistance at $335.

Silver a drifting between $17.00 and $18.00. We see support at $17.25 and $17.00. Resistance is at $17.60 and $17.80.

Courtesy: Commodities Research, Standard Bank