Precious Metals Update

Precious metals put in a strong showing yesterday breaking through some key levels, with signs that the longer term converging market in Gold has been broken.

An increase in physical demand and China's pledge to accumulate a commodity reserve are both dominant factors, however, a sell off in the US dollar should prove the most important factor in the short term.

The break through 642.00 in Gold was watched by all yesterday, with eager anticipation. The long awaited break came with some ease, as the market moved through with little extra volume.

We see 642.20 as support and a good opportunity for fresh longs, targeting 655.50 in the short term and 670.00 in the medium term. Keep stops against short term longs at 637.00.