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Spot Silver 32.33, Gold 1648.50 Down; Further Losses Seen
Mar 20, 2012 By Rhiannon Hoyle Of DOW JONES NEWSWIRES

-- Spot gold down 0.9% at $1,648.20 a troy ounce
-- Precious metals fall as investors take profits
-- Base metals, crude futures also lower
-- Worries over improved U.S. outlook, softening Indian demand weigh on gold

LONDON (Dow Jones)--The spot price of gold is lower in Europe Tuesday, falling in line with other commodities as a stronger dollar and poor appetite for the yellow metal prompts investors to take profits.

At 1026 GMT, spot gold traded at $1,648.20 a troy ounce, down 0.9% on the day. Other precious metals were also down, as were crude futures and base metals on the London Metal Exchange.

A stronger greenback is putting downward pressure on the markets, which are priced in dollars and subsequently tend to share an inverse correlation with the U.S. currency.

Gold is also weighed by fears of softening demand from India--after higher import and excise taxes were introduced--and a sustainable recovery in the U.S. economy, with further data on the U.S. housing market due out later in the session.

The market's technical indicators point to further losses for now, said Commerzbank analyst Axel Rudolph.

"The medium-term top in the spot gold price remains in place with further weakness expected to be seen in the coming months, taking gold towards the $1,600/oz-$1,500/oz region," Rudolph said.

Even if the market manages to consolidate higher in the coming sessions, resistance between the 200- and 55-day moving averages at $1,684.94/oz and $1,699.43 /oz should cap prices, he said.

By 1026 GMT, spot silver was also deep in the red, trading down 1.9% at $32.265/oz.

BNP Paribas Tuesday reined in its silver forecast for 2013, to $51/oz from $52/oz, but reiterated a forecast of $37.50/oz for 2012. It said it expects silver to outperform gold for most of the second half of the year, spurred by an improving economic outlook and better risk appetite.

"Although silver, like gold, remains vulnerable to waves of liquidation," analyst Anne-Laure Tremblay said.

The bank meanwhile raised its 2012 forecast for platinum to $1,840/oz from $1,770/oz, and its 2013 forecast to $2,320/oz from $2,195/oz, citing an improved demand outlook and supply issues in South Africa. The bank has lowered its palladium price outlook for this year, though, saying it expects the metal to average $825/oz, down from $835/oz. It left its 2013 forecast unchanged at $1,125/oz.

"Palladium's performance...has disappointed in recent months," Tremblay said. "However, we remain positive of the metal's price prospects for 2012 and 2013, particularly in a context of better than previously expected economic growth."

At 1026 GMT, spot platinum was 0.8% lower at $1,662/oz, while spot palladium was down 0.8% at $694.25/oz.

-By Rhiannon Hoyle, Dow Jones Newswires; [phone]; [e-mail]
(END) Dow Jones Newswires
03-20-12 0637ET

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