Tuesday, 23 May 2006
Gold was very volatile in Asia, enclosed by more then ten dollarsrange with $652 on the downside and $663 on the upside. In Europe the metalrevisited the overnight lows while holding firm above the $650 firstsupport level.
The AM fixing price in London came out to be $661.7, whichis 16.2 dollars higher compared to the one of yesterday. The sellingpressure capped the market at these levels and the metal opened a couple ofdollars lower on Comex. During the NY session the upside developmentcontinued and after the second London fixing of $666.75 gold graduallyextended the gains to trade above the $670 level where it staid for most ofthe day with a couple of brief dips below.The prices rallied minutes before the close of Comex trading session makingthe high of $674/oz and closing just half a dollar below it.
The market participants still believe that there is a possibility forgold to revisit the previously seen 25-year highs of $730 due to themetal’s save-haven properties. This view is also supported by the oilprices trading back above the $70 per barrel, strengthened by the USgovernment forecast of the hurricane season that can threaten therefineries again this year. We think that after the experienced downsidecorrection the yellow metal needs to consolidate in order to be able toregain the upside momentum. However if the speculator’s and investor’sbullish sentiment was to change, the spot could pullback to the $600-620area. For the short term we see the metal well supported around the $650level with $675 remaining a major upside resistance. Tomorrow the market islikely to be influenced by the US economic data with MBA MortgageApplications out before Comex opening and durable goods orders along withnew home sales later in the afternoon, which are awaited to be worsened.
Silver was tracking the gold’s moves, drifting lower to $12.37 inAsia compared to $12.50/oz late NY on Monday. The prices graduallyrecovered from the lows with a couple of retreats along the way to see thehigh of $1319.5 traded on May Comex contracts and that is where it endedthe day. The metal had climbed 1.35 dollars from the four weeks low of$11.90 seen yesterday. The bounce up was helped by strengthening copperprices which gained more then 1000 dollars on the day in the absence of thefollow through selling. We believe that silver has the potential to tradehigher with $13.50 now being the next resistance level and volatilityremaining the main description of the current market.
MKS Gold & Silver, Daily Report
by Lidia Nazarova
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