Precious Metals Wrap-Up: Gold Snaps 3-Week Loss Streak, Silver Drops to 50-Day Low, Platinum up

The US dollar has been rallying sharply over the past few weeks weighing on other currencies and dollar-denominated commodities, but a share of safe haven flows and short covering have helped gold register its first weekly gain after three weeks of losses, while silver has fallen to a 50-day low.

Platinum has been on the rise since the Russia-Zimbabwe deal, signed on 5 August, which will help the Russian government to control the platinum output of the African country, the world's third-largest producer of the metal.

Ruschrome Mining, the Zimbabwe-Russia joint venture company, plans to invest $1.6bn (£935.7m, €1.2bn) in developing a platinum mine and constructing a smelter and refinery in the African state, according to Tuesday's Herald, a Zimbabwe-government controlled newspaper.

Russia is faced with several trade and economic sanctions by the West after its relations with Ukraine deteriorated in July. Russia, at the same time, shows no restraint and is coming with its own sanctions against the Europe and the West.

Russia's troubled trade relations means constrained supply of commodities like crude and platinum and palladium, as the country is a major producer of them.

Silver and palladium ended the week to 8 August down, the former posting its fourth and the latter the third consecutive week of losses.

Fresh instances of geopolitical risks related to Russia-Ukraine and Israel-Gaza have increased safety seeking flows to the hard currency, weakening silver which, unlike gold and platinum, didn't have any technical or news-related boost.

Palladium too gained after the Ruschrome deal but the rally was not strong enough to end the week stronger.

Dollar had rallied across the board in the recent weeks. The USD index, a trade-weighted measure of its strength against a basket of major currencies, has risen to an eleven-month high of 81.71 on 6 August before ending the week slightly weaker at 81.40.

It is the fourth straight week of gains for the index which has rallied more than 2% from the two-month low of 79.80 touched end-June.

The Price Action

Gold had fallen to a two-and-a-half month low of $1,279 in the last week of July before short-covering fresh bouts of safe-haven flows aided a recovery in the metal. It ended Friday's deal at $1,309.70, after rising to as high as $1,322.69, its highest since 18 July.

Silver fell to $19.71, its lowest since 18 June before edging back to $19.87 by Friday's close. The metal has fallen 7.8% from the near four-month high of $21.57 it touched on 10 July.

Platinum had fallen nearly 5% from the 10 July high of $1,518 to $1,443, a 40-day low, by 5 August when the Russia-Zimbabwe deal started impacting the metal. It has rallied more than 2.8% to $1,484.60 since then before ending the week at $1,470.70.

Palladium dropped more than 6% from the 17 July multi-year high of $887.90 by 5 August, but the metal rebounded more than 3.4% to as high as $863.65 on Friday before ending the week at $857.50.

Technical Outlook

Gold: Next upside targets for gold are $1,330 and then $1,345, the July peak. A break of that will open doors to $1,355 ahead of $1,392.

On the downside, $1,300 and $1,290 are two weak support lines ahead of a stronger $1,280. A break of that is unlikely to see any further stops until $1,240, the early June low.

Silver: On the higher side, $20.34 and $20.67 are the immediate levels to watch ahead of $21.20 and then a retest of the July high of $21.57. A break of that will open doors to $21.75 and then $21.85.

On the downside, $19.40 and $19.0 are the two levels to watch ahead of the 30 May low of $18.61.

Platinum: Its two immediate higher side levels are $1,490 and $1,500 ahead of a retest of $1,518.

On the downside, it will have weak stops at $,1460 and then $1,450 and $1,440 but a break of $1,450 will increase risks to $1,420.

Palladium: A decisive break of the current level will take the metal to $875 and then the 17 July high will be the level left before new multi-year highs.

On the downside, palladium will have stops at $843 ahead of a retest of the 5 August low of $834 and a break of that will open doors to $820 before a stronger support line of $805.