Friday, 19 May 2006
Gold remained under pressure in Asia, briefly dipping below the $680support level and being unable to approach the $690/oz where sellingremains in evidence and provides resistance. The metal drifted a couple ofdollars higher in Europe but was unable to retain the gains and fell downto $678 prior to Comex opening.
The US currency strength triggered furtherfund selling after the opening of the NY session. The dollar soared withthe euro falling to below 1.27 level and Japanese yen hitting the high of112.18 compared to 110.77 closing price last night. The move was moreoversupported by the crude prices slipping below the 70 per barrel mark.
Selling continued on the second London fix. We started trying at $660.50and forty minutes later fixed nine dollars lower which marked the low ofthe day. Overall the metal collapsed 37 dollars from the high of $688.50seen in the morning and only fractionally recuperated the losses by the endof the day.
Even if the concerns about the dollar uncertainty, US inflation andtensions in the Middle East persist, we believe that after today’s breakbelow the $675 important technical level it will be difficult for gold torecover back to the previously seen highs. We do not exclude a possibilityof the selling pressure to continue and a risk of the prices retreating tothe 600 dollar mark if the spot trades below $650/oz. For the next week theUS data to watch out for will be; durable good orders and new home salesWednesday, initial jobless claims and annualized GDP Thursday andUniversity of Michigan confidence number along with the personal income onFriday.
Heavy fund liquidation was seen across the whole commodity complex.Silver also experienced a downside correction continuing to mirror thegold’s moves. After a quiet Asian session it fixed at $12.43 in London,down from previous $13.12/oz and then collapsed all the way to $12.18/oz.We believe that the white metal looks weak and that further weakness cannotbe ruled out with $12.00 acting as the first support level.
Platinum and palladium favored the downside as well today withplatinum making a less sharp fall due to the positive market fundamentalsthat remain in place. The metal also drove some support from the statementof the world’s top platinum distributor Johnson Matthey, who said that thedemand for the metal is set to outplace the supply for the eighth year in araw in 2006.
MKS Gold & Silver, Daily Report
by Lidia Nazarova
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