precious metals · 2008-03-03 · precious metals sales and trading • london 44-20-7815 4210 •...

Precious MetalsMonthly report

Standard Bank PlcCannon Bridge House25 Dowgate Hill, London EC4R 2SB

3rd March 2008

Precious Metals Sales and Trading • London 44-20-7815 4210 • New York 1-212-407-5102 • Hong Kong 852-2822-7888Singapore 65-6533-7086 • Dubai 971-4-3300-011 • Tokyo 81-3-4520-6003www.standardbank.com • Reuters prices SBLLMETALS/Reuters direct dealer STPM

Important Information Please Refer to Back Page. This report may be found at www.standardbank.com

Gold Gold continued to benefit during February from the nervousness in the financial

sector and latterly weak economic figures from the United States (and to a lesser extent

Europe and Japan) that extended concerns over possible further tightening of credit

conditions. The inflation figures in the United States, particularly at the intermediate level

(such as semi-finished goods) have prompted talk of stagflation and this has encouraged

continued investment in the gold sector (against a persistently bearish outlook for the

dollar prompted in part by record high oil and other commodity prices).

With retail physical demand remaining dented by high and volatile prices, the buy-

side of the market has remained dominated by funds and speculators. There have

been signs of some profit taking from private holders, in the Far East especially.

The market was unfazed by news that the United States Treasury and EU Finance

Ministers agreed in principle with the proposal for sales of 400 tonnes of gold from

the IMF, and was more concerned by Dr. Bernanke’s testimony on the delivery of

the semi-annual Monetary Policy Report to the Congress, which focus more on the

downside risks to the economy than the spectre of increased inflation.

At the start of March gold is trading above $970 and this is prompting

suggestions of an imminent attack on $1,000/ounce. The majority of indicators

suggest that much of the “bad news” is already in the price and it is arguable that

while gold has the potential for further gains, much of the upward course has been

run, especially with the physical market firmly on the back foot.

•

•

•

•

Gold 1

Silver 6

Platinum Group Metals 9



Precious Metals

0

50

100

150

200

250

300

Jan-07 Apr-07 Jul-07 Oct-07 Jan-08

Contracts000s

550

650

750

850

950

US$/oz

Non-Commercial Non-ReportableSettlement Price

Spot gold in dollar terms against $; euro rate

Gold traded between a low pm fix of $887.50 (on the 5th of

February) and a high of $971.50 at the end of the month,

a range of just over 9%, while gaining a net 6% over the

month. In euro terms the range was almost identical, but

the net gain was just 4%. Market sentiment is for further

gains in dollar terms and with doubts over the euro there

may well be increases to come in euro terms also.

Non-commercial and Non-reportable Net Positions

The net long speculative position on COMEX fluctuated

narrowly in February, suggesting that the position may have

reached critical mass, although the volume figures (see below

left) suggest some migration into the Over the Counter

market. At end-January, the position was 762 tonnes, rising

to 786 tonnes on 19th February and easing fractionally to

785 tonnes at month-end.

COMEX futures volume and open interest ETF Holdings

Volumes traded on COMEX tailed away in the first half of

the month and prices traded effectively sideways, before

starting to increase again thereafter as market interest was

rejuvenated and the price resumed its upward run. Daily

volumes averaged 409 tonnes, compared with 242 tonnes

per day in February 2007. Open interest dwindled in the

first half in line with volume and price, before reviving to

reach 1,540 tonnes in late February.

Holdings in the major Exchange Traded Funds increased by 17

tonnes over the month, with the major changes taking place

in the final week in the wake of Dr. Bernanke’s Congressional

testimony. The major changes were in the New York

StreetTRACKS Fund (eight tonnes), with small increases in the

majority of the others, taking the total to 880 tonnes of gold.

Dollar:Euro & Gold Price

550

650

750

850

950

1050


US$/oz

1.20

1.28

1.36

1.44

1.52

US$/€

PM Fix $ US$/€

0

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350


Contracts000s

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Contracts000s

Volume Open Interest (rhs)

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Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08

Tonnes

300

400

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700

800

900

1,000US$/oz

GBS LSE streetTRACKS iShares

Other Gold PM Fix



Precious Metals

Gold and the S&P 500

The equity markets remained nervous about economic

conditions, with the Dow Jones Industrial Average falling by

3.1% and the S+P 500 shedding 3.5% over February, with

early falls followed by stability and then renewed weakness

at month-end. Gold was a major beneficiary of the latter

weakness and is expected to continue to show strength as

the markets debate the deteriorating outlook for economic

activity in both the US and Europe.

Spot gold vs gold equities

Lease rates continued to increase for most of February,

following their upward turn in January, before slipping

lower in the final week of the month. This looks as if it

reflects a degree of short covering in the market, but the

curve remains flat, with rates below 0.5% in the twelve-

month tenor.

While the average price in dollar terms registered a 39% gain

over February 2007, the average in both euro and terms was

23% higher, and in Swiss franc terms, 22%. With strong

commodities buoying the Australian and Canadian dollars

the increase was 19%, but the weakness of the Rand meant

that local South African prices gained 48% over February

2007 levels.

Gold mining equities outperformed the yellow metal over

the month as a whole, with a gain of 8% against gold’s rise

of 6%. This reflects a stronger second half performance as

both gold and mining stocks turned up. The equities gained

12% in the second half against gold’s 6%, suggesting that

the markets trust the recent rise in the gold price, and are

looking for further gains, but also that any increase in the

near-to-medium term is likely to be gradual.

Leasing Rates (%)

Feb % Ch.

US$/oz 2007 Jan-Feb 08 Feb 08 mom yoy

Average 695.91 905.59 923.29 4% 39%

High 841.75 971.50 971.50 N/a N/a

Low 608.30 840.75 887.50 N/a N/a

3-mth 12-mth

Average

2007 0.21% 0.26%

Jan-Feb 08 0.25% 0.39%

Feb 08 0.29% 0.45%

High

2007 0.19% 0.20%

Jan-Feb 08 0.40% 0.58%

Feb-08 0.40% 0.45%

Low

2007 0.04% 0.03%

Jan-Feb 08 0.15% 0.22%

Feb-08 0.17% 0.36%

Prices (based on a.m. and p.m. fix)

550

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1050


GoldPrice

1200

1300

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1500

1600

S&P500

Au $ pm fix S&P 500

550

650

750

850

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1050


GoldPrice

100

120

140

160

180

200

220

XAUIndex

Au $ pm fix XAU



Precious Metals

Gold vs the Long Bond Yield Gold and the VIX Index

Gold and the long bond yield resumed their normal

relationship (i.e. running in similar directions) in late January

and this was sustained through to late February, with gold

benefiting from uncertainties in the Treasury markets.

The bond market then reasserted itself as a “safe haven”

in late February as the markets again focused on falling

interest rates, so that in late February gold was rallying and

yields were easing. With renewed concerns over economic

slowdown, this fresh inverse relationship may be sustained

for the near term although much of the moves may now be

complete.

The VIX Index measures market uncertainty through

equity option volatility and does not always have a strong

relationship with gold. The correlation between the two

(simple polynomial regression) has been 42% over the past

three years. In February the correlation was 49%. The VIX

Index eased over much of February but in this parameter,

too, the markets’ increasing concerns were reflected in the

final week, with VIX rising from 21.0 to 26.5. Further gains

are expected in both VIX and gold although there is a feeling

that financial stocks may be bottoming out and this would

also point to a decline in the rate of increase in both gold

and VIX.

The strength of the oil price remains an important parameter

in the financial markets as it partly reflects geopolitical

tension (exacerbated by disruption in shipments between

Venezuela and the US) and of course feeds into inflationary

expectations. OPEC talks in the first week of March will be

instructive as the price has been strong in anticipation of

production cuts. This will therefore be a key indicator to

watch for short term signals and may well cascade into gold,

if only at a muted level.

Key IndicatorsKey Indicators

Feb % Change

(end-period) 2007 Feb-08 mom yoy

S&P 500 1,468 1,331 -3% -5%

CRB Index 427 483 10% 29%

XAU Index 173 197 6% 41%

US 30-yr Bond Yield 4.50 4.41 N/a N/a

Gold Price ($/oz) 836.50 971.50 5% 46%

Key Indicators

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1050


GoldPrice

3.5

4.0

4.5

5.0

5.5

6.0

BondYield

Au $ pm fix 30-yr Bond yield

550

650

750

850

950

1050


GoldPrice

3.5

8.5

13.5

18.5

23.5

28.5

33.5

VIXIndex

PM Fix $ VIX

Gold

February 27th 2008

Darran Grabham* +27-11-378-7228 [email protected]

Gold Gold continues to trade to new highs, but the bull trend remains restricted to trendline resistance of a potential ascending wedge pattern — this is a trend-ending formation. We are not pre-empting a bearish breakout, and a positive view is maintained while the support line of the wedge protects the downside. However, caution is advised, with the outlook only becoming signifi-cantly bullish again on a move beyond the upper trendline.

The $910 level represents support of the ascending wedge pattern, with a break lower warning that the market is in the process of establishing a near-term top. This development would be expected to yield a move into the more important $870 to $850 sup-port zone, and an aggressively bearish view will only be expressed below $850 — gold will then be vulnerable to a move below $800. The topside is protected by the $960 to $970 area. Once this resistance zone is breached — a move beyond $980 should provide the necessary confirmation — the way will be clear for a move to $1,080. An interim top may develop around $1,040.

Source: Reuters

Source: Reuters

USD/XAU (Daily)

18Oct07 01Nov 15Nov 29Nov 13Dec 27Dec 10Jan 24Jan 07Feb 21Feb

PrUSDOzs

750

800

850

900

The trend remains positive, but gold must now breach trendline resistance to signal the next phase of the trend towards $1,080

USD/XAU (Monthly)

Jan00 Jul Jan01 Jul Jan02 Jul Jan03 Jul Jan04 Jul Jan05 Jul Jan06 Jul Jan07 Jul Jan08

PrUSDOzs

300

400

500

600

700

800



Silver

0.000

20.000

40.000

60.000

80.000

100.000


Contracts000s

8

10

12

14

16

18

20

US$/oz

Non-Commercial Non-ReportableSettlement Price

Silver staged a stronger gain than gold during February, reflecting

its innately higher level of volatility. The month-end fix of

$19.62 was 14% higher than the opening fix of $17.19 and

47% higher than at the end of February 2007. In common with

gold, the physical demand for silver jewellery and investment

products has remained under pressure, but this is a considerably

smaller component of the market than is the case with gold

at approximately 30% of total demand as compared with over

80% in gold’s case (both figures exclude ETF investment). It

has therefore been less of an influence than in the gold market,

while silver has also been in the grip of speculative, and to a lesser

extent investment, activity.

Trading volumes on COMEX were lively during the month,

with a huge surge on the 26th and 27th when prices soared from

a fix of $18.12 to $19.33 (and ahead of a further gain towards

month-end).

Silver is close to the psychologically important $20 level and

is likely to mount an attack on $20 in the near-to-medium term,

driven both by gold and by technical considerations. The market

is aware of silver’s industrial bias, however, and any retreat from

commodities as an asset class opens the way for sharp falls, so

the metal should be traded with caution.

•

•

•

Comex: Silver Non-Commercial and Non-Reportable Positions

Spot Silver Price; Dollar:Euro Rate Silver, gold and copper; Jan 2007=100

While silver prices gained 14% in dollar terms over the

month the gain in both euro and yen terms was 11%. In

euro terms the average February price was 12% higher than

a year previously. The correlation between silver and the

dollar:euro rate for the month was high at 75%, against a

correlation for the past year of 60%, although this may ease

as the rally runs out of momentum in the medium term.

The net long speculative position on COMEX dropped to

19,232 tonnes on 26th February from 23,393 tonnes,

with a sharp increase in small-scale short positions. Open

interest figures for the final week of February would tend

to confirm anecdotal evidence that the strength of the late

rally was boosted by substantial short covering, and this

speculative long position may therefore show a sizeable

increase in early March.

Silver’s correlation with gold over February was 91% against

an a average of 82% over the previous twelve months,

confirming the speculative nature of recent moves and how

gold and silver have been working in tandem. The correlation

with copper, at 77%, against an average for the previous

twelve months of almost zero, reflects the resurgence in

interest in commodities as an asset class, which is likely to

prove supportive for now.

Dollar:Euro & Silver Price

1100

1300

1500

1700

1900


cents/oz

1.20

1.28

1.36

1.44

1.52

US$/€

London Fix US$/€

80

100

120

140

160

180

200

220


Index

Gold Silver Copper



Silver

0

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40

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Apr-06 Sep-06 Feb-07 Jul-07 Dec-07

MillionOunces

8

10

12

14

16

18

20

US$/oz

iShares Silver Trust Holdings London Silver Fix

The Gold : Silver Ratio

ETF Holdings

Silver’s final fix of February at $19.62 was the highest since

late October 1980, when silver was retreating from the

sharp gains of 1978-1980. The recent gains represent an

increase of almost 4.4 times since the start of silver’s bull

market in mid-2003, an average rate of increase of 39%

per annum. Silver’s volatility is well documented and while

the commodities markets, and gold in its own right, remain

firm then silver will continue to thrive. It will, however, fall

sharply when sentiment sours and any early warning signals

should be treated with the utmost respect.

Holdings in the silver Exchange Traded Fund dropped in the

first week of February, and fell to 5,056 tonnes on the 7th

before recovering to 5,072 tonnes. Interest revived later

in the month, with a 77 tonne increment on 21st February

and then 216 tonnes added as prices surged in the last week

of February. Holdings were thus 5,365 tonnes on 28th

February, metal content value $3.3 billion. The London-

based ETC shed 135 tonnes to 300 tonnes.

The gold:silver ratio ended February at 49.5, after averaging

52.6 over February and 52.0 over the year to end-February

2008. The fall reflects both how silver and gold have been

dominated by speculative activity, and with short covering

giving especial fire to the speed of silver’s late rally, a

contraction in the ratio was inevitable. This is the lowest

level since late June 2007 as the metals were about to

turn upwards once more after a period of drifting lower.

Sentiment is different this time and the ratio will be due to

expand as the latest rally loses momentum and ultimately

turns down.

Turnover on COMEX was healthy during all of February, with

the average for the first part of the month, before the surge

in the final week, averaging 24% more than in February

2007, at 6,150 tonnes. Volumes soared in the final week,

touching 17,237 tonnes on the 27th. This was initially

characterized by two-way trading, with open interest falling

only fractionally, but the subsequent drop in open interest

points to short covering, which aided the speed of the rally

in price and suggests that the move may due to slow down,

if not come to a halt.

Feb % Ch.


Average 13.38 16.75 17.57 10% 26%

High 15.82 19.62 19.62 N/a N/a

Low 11.67 14.93 16.48 N/a N/a

Prices (based on London fix)

Turnover Open Interest Price (US$/oz)

2007 21,820 115,602 13.38

Dec-07 20,468 145,939 14.36

Jan-08 34,073 174,140 16.05

Feb 47,896 181,781 17.66

Source: COMEX

Comex Turnover and Open Interest(Number of Contracts, 5,000 oz, daily averages)

Gold : Silver Ratio(London gold p.m. fix US$/oz over London silver

fix US$/oz)

40

45

50

55

60


3

Silver

February 27th 2008


Silver A series of rising highs and rising corrective lows dominates both the short– and near-term trends, and above $16.90, a positive view is expressed. Yesterday’s break above $18.50 is an important bullish development for silver, which has already pro-vided an impulsive rally. The bull trend may now encounter resistance around $19.25, so caution is advised at current levels, with the possibility of a secondary retracement occurring.

The $18.50 level is now expected to contain corrective weakness, and trading from the long side above this level is advised. Silver is forecast to trade beyond $19.25, with the next move higher targeting $20.50. Another temporary top may then develop but, within the broader trend, the bull market can now extend to $22 — there are currently no objectives beyond $22. A move back below $18.50 will stabilise the immediate outlook, paving the way for further corrective activity. Silver weakness through $16.90 will confirm that the market has established a near-term top, with additional support provided by $16.19, and $15.23 which provides a move important support point as a break lower will have the potential to trigger a decline to as low as $13.60.

Source: Reuters

Source: Reuters

USD/XAG (Daily)

18Oct07 01Nov 15Nov 29Nov 13Dec 27Dec 10Jan 24Jan 07Feb 21Feb

PrUSDOzs

14

16

18

13.58

15.23

Important breakout

USD/XAG (Weekly)

May06 Jul Sep Nov Jan07 Mar May Jul Sep Nov Jan08 Mar

PrUSDOzs

10

12

14

16

18

11.03

13.58



Platinum Group Metals

Platinum & Gold Prices

Supply concerns persisted over February, driving

platinum to fresh all time highs across the $2,000

threshold.

Resurgent interest in palladium fuelled by

expectations of substitution gains versus platinum lifted

the metal’s price to levels not seen since the aftermath in

2001 of palladium’s $1,000 price bubble.

After a fairly muted initial response to the South

African power crisis the full effects on rhodium were

appreciated over the month with prices skyrocketing to

above $9,000.

Platinum & Palladium

Once again, platinum prices broke all records over the

month as the market’s bullish tone was maintained by

robust fundamentals, greatly underpinned by the ongoing

South African supply concerns. At the same time, platinum

was further supported by strongly positive sentiment to

the whole precious metals complex against a backdrop

of a sliding greenback, record oil and food prices, and US

wholesale price inflation at levels not seen since 1981. This

was sufficient to maintain gold at elevated levels, although

its gains over the month were relatively modest. By

comparison, platinum turned in a remarkable performance,

gaining 23% from an opening fix of $1,741 to a February

close of $2,150. Within the month, platinum touched a

fresh historic peak on the 21st of $2,180 at the second

fixing session.

•

•

•

Feb % Ch.


Average 1,305 1,786 1,997 26% 66%

High 1,544 2,180 2,180 N/a N/a

Low 1,112 1,522 1,741 N/a N/a

Platinum Prices (London fixes)

Despite the negative outlook for global growth (including

the potential for a slowdown in new automotive demand),

such concerns were overshadowed by the prospect of a

significant short-fall in South Africa’s platinum supplies this

year and the possibility of a further large deficit. After the

load-shedding of late January, 90% of normal electricity

supplies was restored to the mines in February by the state

power provider, Eskom. However, considerable uncertainty

remains, with the effects of this 10% power reduction

compounding with the ongoing challenges of improving

employee safety and attracting and retaining skilled workers.

Furthermore, it seems that the availability of power is likely

to be a long term problem, with shortages expected to

persist through to 2012.

Supporting the pessimism over platinum supplies, February

saw key reports from some of South Africa’s major

producers, including Anglo Platinum and Impala. Amplats

indicated a loss of some 30,000 ounces of platinum as a

result of the end-January power stoppage and predicted the

Platinum and Palladium PricesPlatinum & Palladium Prices

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2300


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Platinum Palladium (rhs)

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1,800

2,000

2,200

2,400


Platinum

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1050

Gold

Platinum Gold




US Dollar: Euro

ETF Securities - Pd Holdings

loss of a further 120,000 in 2008 from the ongoing 10%

power reduction. This came on top of a substantial fall in

refined platinum output last year, which declined to 2.47m

ounces from 2.82m ounces in 2006, as the issues of safety

and skills took their toll. In a similar vein, Impala reported an

initial loss of 10,000 ounces, with a further 10,000 ounces

expected to be shed over the remainder of their financial

year to June 2008.

Regarding the broader economic drivers affecting platinum

prices, expectations for an additional cut in the Fed Funds

rate during the FOMC’s March meeting is now seen as a

given. Dovish Fed policy towards inflation, coupled with

renewed fears over a slowing US economy, drove the dollar

to finally break through the $1.50 resistance barrier against

the euro, dropping past $1.52 at end-month. Briefly

weighing on platinum and gold alike, was news of the US

Treasury’s support for the IMF’s planned sale of a portion

of the Fund’s $98 billion in gold reserves, a decision

necessitated by budget deficits. Although platinum’s

momentum eased following this news, the market in any

case appeared heavy having traded as high as $700 above

its 200 day moving average. Whilst the effect was marginal,

platinum is nonetheless vulnerable to any significant

correction that may occur in gold.

During February, commodity price rises helped fuel

mounting concerns over inflation, particularly oil’s rally to

fresh highs above $100/bbl. This may yet prove supportive

of platinum and gold alike, even at these elevated levels.

What’s more, the IMF food price index and US producer costs

reached levels not seen since the early 1980s. Perhaps

indicative that this trend is set to continue, was the topping

of China’s domestic inflation above 7% in January. The

Platinum 1-month Lease Rate

ETF Securities - Pt Holdings

Dollar:Euro

1.2

1.3

1.3

1.4

1.4

1.5

1.5

1.6


US$/€

US$/€

Platinum Leasing Rates

0

1

2

3

4

5

6

7

8


%

1-month rate

Pt ETF

0

50000

100000

150000

200000

250000

300000

350000

Oct-07 Nov-07 Dec-07 Jan-08 Feb-08

Ounces

Pd ETF

0

20000

40000

60000

80000

100000

120000

140000

160000

180000

200000

Oct-07 Nov-07 Dec-07 Jan-08 Feb-08

Ounces




month at $568. However, although palladium supply is

somewhat constrained by the situation in South Africa,

this is significantly less threatening for palladium where

above-ground stocks are believed to exceed one year of

fabrication demand. Instead, this resurgence of investor

interest appears more focused on what the future might

hold, with the expectation of substitution gains versus

platinum (especially in the automotive sector) featuring

prominently.

In Nymex palladium futures, net long positions remained

elevated at 1.36m ounces of as of the 26th February

(latest available data) and are almost certain to have

since gained further ground. Meanwhile, total holdings

in palladium’s two ETFs experienced another upsurge,

growing by just under 200,000 ounces over February for

an intra-month gain of gain of some 63%. Even in Japan,

investors turned to palladium as margin increases on

platinum triggered a return to favour in Tocom futures and

a further measure of the warmth was seen in the shares

of miners North American Palladium and Stillwater Mining

(both biased to palladium production), which have risen

120% and 153% respectively since interest in the metal

was rekindled at the end of January.

NYMEX: Platinum Net Positions NYMEX: Palladium Net Positions

PBoC’s tightening, rapid appreciation of the renminbi and

rising labour wages are likely to feed into global inflationary

pressures over this year, attracting yet more inflows to the

inflation-haven assets.

In looking to platinum’s trading instruments, the already

impressive wave of funds moving into the metal’s two ETFs

since last November saw a steepening in February, with ETF

Securities’ holdings rising by over 132,000 ounces, and

total holdings increasing by over 50% on the end-January

figure. Meanwhile, the trend in positions in Nymex futures

has experienced an atypical near inverse relationship to

the price, with net longs declining by almost 270,000

ounces (or 36%) from their recent peak in January. This is

suggestive of Nymex speculators taking profits in February,

selling in part into strong demand from ETF investors.

Despite platinum’s impressive gains, the undoubted

star performer of February was its lower profile cousin

palladium, which rose by a stunning 41% to close the

Feb % Ch.


Average 355 420 468 25% 37%

High 382 568 568 N/a N/a

Low 320 363 402 N/a N/a

Palladium Prices (London fixes)

0

200

400

600

800

1000

1200

1400

1600


'000ounces

200

250

300

350

400

450

500

550

US$/oz

Non-Commercial Non-ReportablePalladium Price

0

100

200

300

400

500

600

700

800


'000ounces

1000

1200

1400

1600

1800

2000

2200

2400

US$/oz

Non-Commercial Non-ReportablePlatinum price



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IMPORTANT INFORMATION

Precious Metals

Rhodium

In clearly maintaining its position as the most expensive

metal within the complex, rhodium again set new record

highs, crossing over the $9,000 threshold this month.

Unrelenting demand in the form of autocatalysts (which alone

has surpassed annual mine production four years running;

according to JM) and the power-related supply crisis in South

Africa - a source of 86% of the metal’s production in 2007

- led to a price boost just short of $1,700, or 24% from end-

January. With rhodium now showing resilience even at current

levels, prices remain fundamentally underpinned by ongoing

worries over South Africa, and a foray towards $10,000 looks

increasingly possible.

Rhodium Prices

Source: Johnson Matthey - basis 8am offer

Rhodium Prices

2000

3000

4000

5000

6000

7000

8000

9000

10000

Jan-06 Jun-06 Nov-06 Apr-07 Sep-07 Feb-08

US$/oz

Avg Low High

Platinum

February 28th 2008


Platinum The bull trend has fulfilled the $2,150 objective level and, as we highlighted in our previous report (dated February 19th 2008), there are currently no additional topside projections, and we advise reducing long positions.

The retracement off the $2,192 high is threatening the sustainability of the trend — from a near-term perspective — and a mildly bearish view is now expressed. A decline through $2,090 is expected to provide the catalyst for a breach of $2,065, tar-geting $1,990. Trading from the short side is preferred, with potential for the anticipated sell-off to extend towards $1,925 — platinum is expected to establish a support base between $1,990 and $1,925. Renewed strength beyond $2,166, prior to a break below $2,065 will threaten the bearish near-term scenario. Additional support levels are highlighted at $1,882, with the $1,754 to $1,700 area providing important downside protection. The primary bull trend prevails, but some form of corrective activity is required to assist in the longer-term forecasting process, and we await near-term developments.

Source: Reuters

Source: Reuters

USD/XPT (Daily)

28Nov07 05Dec 12Dec 19Dec 26Dec 02Jan 09Jan 16Jan 23Jan 30Jan 06Feb 13Feb 20Feb 27Feb

PrUSD

1,600

1,800

2,000

1,507

The steep trend has given way to consolidation, with platinum now vulnerable to a corrective phase.

USD/XPT (Monthly)

Jan00 Jul Jan01 Jul Jan02 Jul Jan03 Jul Jan04 Jul Jan05 Jul Jan06 Jul Jan07 Jul Jan08

PrUSD

400

600

800

1,000

1,200

1,400

1,600

1,800

Primary support is situated at $1,700

Palladium

February 27th 2008


Palladium The convincing break above $400 has produced a sustained surge, and the $470 level did not even hinder the rally. The clear-ance of resistance around $400 has signalled a medium-term trend reversal, with palladium set to enter the $650 to $685 target zone. There is not a great deal of resistance between current levels and $650, as the bear trend from 2001 to 2003 did not establish many corrective peaks. A previous support line — refer to accompanying monthly chart — may provide a bar-rier at $565, so some caution is advised on approach of this level. Initial support levels are situated at $532 and $503.

The $650 to $685 area is regarded as the minimum target zone, but there are currently no firm additional objectives beyond $685, with $730 and $765 highlighted as potential resistance points. However, we advise reducing long positions once $650 to $685 has been achieved. Palladium weakness through the $503 to $470 support zone will delay the bull trend, with a decline through $400 implying that the market has formed a top.

Source: Reuters

Source: Reuters

USD/XPD (Weekly)

Apr05 Jul Oct Jan06 Apr Jul Oct Jan07 Apr Jul Oct Jan08

PrUSD

200

300

400

500

406

255

313

USD/XPD (Monthly)

96 97 98 99 00 01 02 03 04 05 06 07 08

PrUSD

200

400

600

800

1,095

Primary breakout

precious metals · 2008-03-03 · precious metals sales and trading • london 44-20-7815 4210 •...

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