Monday, 22 May 2006
Gold continued favoring the downside after Comex close Friday. Tocomwas limit down for the whole day and the metal drifted to the low of $644on access after popping above $660 where selling accelerated capping themarket. In Europe the spot extended the low to $637.00/oz in the morningbefore recuperating some ground prior to the opening of the NY session.
Gold fixed at $652.5 on the second London fix compared to $651.50 atFriday’s PM on emerged buying. The metal traded firmly above the 650 dollarmark for the rest of the day making the high of $658 and closing on the topside of the intraday range.
Gold lost around 11 percent from the highs of $730 seen on the 12thof May. The supportive factors seem to be less strong with oil prices stilltrading below the $70 per barrel. We believe that gold needs to consolidateand stabilize above the $650 level before a move towards the $675 mainresistance on the upside can be possible. We do not exclude though a riskof a further weakness as the market remains very volatile and lacksliquidity. Resent US dollar strength also weights on the precious metalmarket which keeps the metal exposed to a sudden change in the investorssentiment.
Silver also lost nearly 40 cents overnight compared to the NY closingFriday to see the low of $12.08 on access with Tocom being limit downtoday. The lows were prolonged in Europe by further 18 cents to $11.90/oz,the lowest level seen in nearly a month. Subsequently following the gold’smove higher on Comex the white metal also recovered ground to above the$12.50 resistance level and close just a couple of cents below it. Withbase metals remaining under pressure we believe that silver volatiletrading will continue with $12 acting as a first support and $12.50 as aninitial resistance.
MKS Gold & Silver, Daily Report
by Lidia Nazarova
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