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Strikes Support Precious Metals

Commodities | Sep 20 2012

By Jonathan Barratt
Gold and silver markets continue to look solid. Apart from continual discussions on the inflation effects the stimulus programs will be having we are getting a little support from the ongoing saga at the Lonmin platinum mine at Marikana South Africa. The strike ended when the miners accepted a 22% increase in their pay packets. This is a significant increase and victory for miners, however the concern is that other miners will also seek pay rises of a similar nature. As such we anticipate an escalation in strikes, which ultimately see a decrease in production. Already, the strikes have lost South Africa, $563million in lost production, and some companies as a result have put on hold any expansion plans.  If we do see an escalation in strikes then expect the price of gold to remain further supported as demand will remain stable and growing yet supply will ease.

In gold US1785 is near term resistance and support is at US1750. Silver seems to be performing better than gold and if US35.00 is cleared suggest higher price action. Look for a break above US35.20 in order to add to the position.

Chart point:

Resistance for gold stands at US1785 and for silver it remains at US35.00. Support is at US1750 and US33.70 we have seen a solid move over the last week and should not be surprised to see some consolidation.  Support is US1685 for Gold and for Silver it is at US 31.80. Momentum indicators cannot be trusted at the moment for a good signal.

Edited by Jonathan Barratt, Barratt's Bulletin is a weekly subscription newsletter that provides expert analysis of commodity markets, global indices and foreign exchange movements. Click here to take a no obligation 21-day trial to Barratt's or to learn more visit Content included in this article is not by association necessarily the view of FNArena (see our disclaimer).

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