Precious Metal Prices Hold On Technical Factors

February 8, 2010 – Although caught in an uncomfortable sell off last week, precious metal prices stabilized and avoided technical factors that would have triggered additional liquidation. This stabilizing indicates renewed support for precious metals and could signal the anticipated rally in spot prices.

While analysis of the US jobs data and concerns over debt to GDP ratios in Spain, Greece, Italy and Portugal continued to suppress precious metal prices, metals remained above their 100-day and 200-day moving averages as well as their resistance levels; avoiding a drop below these numbers lessened the amount of sell offs by technical buyers.

Gold prices have remained steady near $1,065 per ounce, silver near $15.15 an ounce, platinum around $1,475 per ounce and palladium just above $400 per ounce. By not dropping below their resistance points, precious metals have steered clear of lower holdings from long-term players such as funds, corporate traders and industrial buyers. The lower prices have also worked to consolidate demand among private investors in advance of an anticipated rally.

With prices currently low compared to support factors, now is a good time to purchase precious metals. Concern in Europe will eventually give way to renewed anxiety over US inflation and debt issues, meaning that precious metal investments, especially gold and silver bullion, could be in line for substantial price increases.

Bullion is generally regarded as a successful hedge asset, protecting investors in times of economic hardship. Investors should be watching market movements and considering the best time to increase precious metal holdings. 

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Danny Burns

Senior Staff Writer - Precious-Metal.org