QMX Gold Corp. (fka QMXGF)

[the cork]

1338.90 - Spot Gold Down, Further Short-term Losses Seen
LONDON, Nov 17, 2010 (Dow Jones Commodities News via Comtex) --
By Rhiannon Hoyle

Spot gold was down marginally in choppy trade in Europe Wednesday, and market participants said they see momentum continuing to point lower in the near term.

The market Tuesday recorded its third consecutive day of losses after slumping in a broad-based commodity selloff, and analysts fear prices could plunge below $1,250 a troy ounce before stabilizing.

"The [recent] losses show this correction could go deeper than we had expected," a precious metals trader in London said.

Spot gold lost 1.5% of its value Tuesday, and now trades about 6% off last week's record high.

At 1040 GMT, it traded at $1,336.70/oz, 0.2% on the day.

"Strategically, we remain bullish, targeting $1,485/oz into the year-end, but in the near term the risk is that a stronger dollar, coupled with higher U.S. yields, will drive gold into the $1,250/oz-$1,200/oz area before the selling stops," Barclays Capital said in a technical report.

On top of the recent strength in the greenback, the start of year-end profit-taking will be bearish for gold in the short-term, market participants said. Speculation of monetary tightening, and a possible increase in interest rates, in China will also continue to weigh on the market, they said.

Barclays Capital said market attention had shifted "to the recent low at $1,314/oz, below which we would expect sizable stops" to be triggered.

The World Gold Council Wednesday said global gold demand in the third quarter increased 12% from a year earlier on strong buying across the retail investment, jewelry and industrial sectors.

Total identifiable gold demand for the quarter was 921.8 metric tons, up from 823 tons in the same quarter last year, the WGC said. Demand was, however, down from 1,055.4 tons in the previous quarter, which had set a new record in value on the back of "exceptional" levels of investment demand, it said.

Investment into exchange-traded funds and similar products waned, dropping 7% against the third quarter of 2009, to 38.7 tons. It was down a massive 87% from the second quarter of 2010, when strong ETF flows drove the quarterly value of gold purchases to a record high.

"ETF demand in 3Q was a lot lower, but you have to remember the exceptionally high level it was coming from," WGC Investment Research Manager Eily Ong said. "The market was also assessing what was happening with the quantitative easing announcement and, now that [has been digested], it could very likely prompt investors to look for more allocation in gold this quarter."

Meanwhile, at 1040 GMT, spot silver was trading down 0.3% at $25.355/oz.

Platinum group metals were trading mixed, with spot platinum unchanged at $1,638/oz and spot palladium down 0.6% at $634.50/oz.

Specialty chemicals company Johnson Matthey PLC (JMPLY) has tipped platinum to average $1,750/oz, in a trading range from $1,550/oz and $1,900/oz, over the next six months. In its closely watched interim review report, released Tuesday, the group said it expects palladium to average $710/oz over the next six months, trading as high as $850/oz and unlikely to fall below $550/oz.

Platinum is tipped to remain in a moderate surplus in 2011, and palladium should be close to balance, although investment demand from exchange-traded funds and institutions could be "the swing factor" for the markets, it said.

Adam Collins, analyst at Liberum Capital in London, said the group's 2010 volume predictions for recycling supply and catalyst demand "are more bullish than we expected."

It said gross automotive demand for platinum is forecast to increase 800,000 ounces to 2.99 million ounces in 2010 and the recovery of platinum from recycling in the autocatalyst, electrical and jewelry sectors is set to rise 435,000 ounces to 1.84 million ounces.

Jewelry and investment forecasts are more bearish than predicted, though, he said, but "nevertheless Johnson Matthey is sanguine about the likely near-term price development seeing a potential range of $1,550/oz worse case over next six months."

-By Rhiannon Hoyle, Dow Jones Newswires; [phone]; [e-mail]

(END) Dow Jones Newswires

11-17-10 0557ET

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