Wednesday, 24 May 2006
A large sell off on access brought the gold to open eight dollarslower on Tocom compared to the close on the highs of the day in NY Tuesday.The metal weakened further in Asia to $663/oz on long liquidation fromgeneral public before recuperating some ground and hitting the high of$670.50 during the European trading. After Comex opening continuing sellingpressure pushed the prices at first to $650.50/oz.
Subsequently the dollarretreated slightly following the worse the expected US durable goods orderswhich helped the gold to rebound a little. The numbers fell by anunexpectedly large 4.8 percent in April. According to the governmentreport, the decline was due to a drop in orders for civilian aircrafts andcomputers along with electronic products. This data can be interpreted as aslight sign of a slow down in the American economy. The second Londonfixing started along with the release of US new home sales data. Thefigures rose to a seasonally adjusted 1.198 million unit annual rate from adownwardly revised 1.142 million in March which defied predictions of aslowdown.
The fixing was long and choppy. The prices started trying at$653.50, went as low as $644.5 and finally forty minutes later fixed at$648.50. Another wave of selling after the PM fix dragged the metal pricesto the low of $641. Gold spend the rest of the day trading on the bottomside of the intraday range failing to recover barely any of the losses. Acouple of minutes before the market closed the spot dipped to $638 andclosed there.
We believe that the yellow metal looks weak failing to sustain the$640 important support level and that a further pullback to the $600-620area cannot be ruled out. For the short term we see the metal bounded by$630-650 range. Tomorrow the market is likely to be influenced by the USeconomic data with an expected decline in the existing home sales and animprovement awaited in the initial jobless claims along with the annualizedGDP for the first quarter.
Silver also favored the downside after a very promising close lastnight, opening nearly thirty cents weaker on Tocom and dipping furtherbelow the $13 support level. In Europe the metal made an attempt to reachTuesday’s highs but fell 10 cents short of it before following the gold’smove lower. The prices hit $12.52/oz and spend the rest of the day hoveringaround the12.60/70 levels. The market remains very volatile within aconsolidation phase. We believe that there is a risk of a further pullbackif gold extends its losses. For the short term we see the metal tradingwithin the $12.00-13.50 range.
MKS Gold & Silver, Daily Report
by Lidia Nazarova
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