Gold hovers near 50 EMA support; Palladium on strong bullish uptrend

Gold climbed 0.3 percent on Thursday, showing some correction from the previous session’s slide amidst underlying uncertainties surrounding the U.S. fiscal crisis negotiations. Prolonged discussions in the white house with no clear solution could increase risk aversion and propel investors towards safe haven buys and lift gold prices. In the short term, hopes for a quick resolution are benefiting gold as it keeps pace with stocks. Yesterday, bullion followed the S&P 500 index and crude oil higher amidst choppy trading.

Gold was up slightly after the previous day’s 1.5 percent decline and hovering around the 52 period EMA at the moment. With the MACD cutting down the signal line and languishing at the zero level, we foresee a likely downward move towards the 100 period EMA as the next support, coinciding with the $1700 an ounce psychological levels. If we receive no meaningful results on the talks on resolving the fiscal cliff, those levels could present a good short term buying opportunity with take profit levels at the $1720 level or for higher risk appetite, the $1740 key resistance.

Silver & Palladium

Silver was amongst the biggest gainer in the precious metals complex, rising 1.42 percent and palladium rose 1.4 percent to its highest in over two months as supply woes and technical buying extended the auto catalyst metal’s rise to a third straight day. Strong technical buying lifted palladium, which is used in making automotive catalytic converters. Supply worries due to mine violence in South Africa and dwindling Russian state stocks also boosted the metal.

MACD cut up on the Palladium chart shows a strong uptrend with both signal line and MACD above the zero line. The blue 50 period MA has cut above the 100 MA and meeting the 200 MA. A confirmation of uptrend is seen when the 50 and 100 MA cut up the 200 MA convincingly. Palladium prices is also riding up the upper band of the Bollinger, showing strong momentum in the bullish trend.

In other news, Shanghai Gold Exchange made an announcement to start a trial run of over-the-counter gold trading on the China Foreign Exchange Trading System on Dec. 3, allowing inter-bank trading amongst themselves in large volumes.