caution needed, page-2

The outlook for palladium seems to be set fair with MKS Finance bullish.

JANUARY 13, 2011, 2:46 A.M. ET.PRECIOUS METALS: Gold Down As Palladium Hits 10-Year High
By James Campbell
Of DOW JONES NEWSWIRES
SINGAPORE (Dow Jones)--Gold and silver were slightly down in Asia Thursday, while palladium continued a strong run.

Despite bullish price action in other commodities including crude oil, gold and silver are struggling to join the party, with economic optimism and periodic bouts of dollar strength undermining sentiment.

"Gold really needs to get back above $1,400 to shake off this corrective move," Triland Metals in a note.

At 0645 GMT, spot gold was at $1,385.20 a troy ounce, down $2.80 since Wednesday's New York close. Tokyo Commodity Exchange December 2011 gold was at Y3,715/gram, up Y3.

Spot silver was at $29.54/oz, down 11 cents, after failing to breach resistance at $29.70/oz despite repeated attempts.

Spot palladium continued a strong week, trading up $3 at $812/oz, just off a $814.50/oz intraday high, its highest level since March 2001.

MKS Finance said in a report that the metal is likely to keep gaining for the rest of the year, with a spike to $1,100/oz possible.

"Supply disruptions from Russia and more marginally from South Africa, and lower-than-expected available stockpiles, are likely to drive palladium higher," it said.

It noted that exchange traded fund buying is having a significant impact on the market's balance.

According to Mitsui Global Precious Metals, 530,000 ounces, or around 9% of global annual mine supply based on last year's figures, has been added by ETFs since Oct. 1.

Spot platinum was giving back some gains at $1,794/oz, down $7, in line with weakness in base metals.

-By James Campbell, Dow Jones Newswires; 65-64154-082; [email protected]