Wednesday, 18-October-2006
It was another day of very narrow range trading in Asia. Gold sliddown to $589.30 shortly after Tocom opening, but recovered as dip buyingemerged in the market. The yellow metal opened around $591-591.50 levels inLondon, which marked the low for our time zone. Price action was verylimited and range bounded.
The precious metal fixed at $595.25 while spotwas trading fifty cents lower. The US economic data was out after theopening of the Comex division of the New York Mercantile Exchange. Therewas an unexpectedly steep drop of 0.5 percent in the US consumer prices inSeptember. According to the report the fall was due to the big plunge inenergy prices. On the other hand the core prices, which are an inflationestimate that strips out the volatile food and energy costs, rose 0.2percent as anticipated. The September core price gains matched those ofAugust and July, sustaining the concern over inflation. At present marketparticipants expect the interest rates held steady at the Federal Reservemeeting next week. The pace of US home building came out to be higher thanestimated last month with the permits for future groundbreaking falling toits lowest rate since October 2001.
Gold fixed at $594 on the second Londonfixing, up 4 dollars from the previous PM one, however due to the lack ofany follow through buying the metal did not challenge the $595 resistance.The report of the US crude inventory levels also failed to move the market.Distillate and gasoline stocks fell by much larger than projected due tothe sharp slow down in US refining activity last week. As a consequencethis boosted crude oil inventories. The precious metal saw some two waybusiness in an extremely quiet market conditions. Minutes before the closegold made a move on the downside to extend the low to $588.75 and ended theday just below the $590 level. We believe that a corrective move lower ispossible before we could head up to the $600 psychological resistance.
Silver was also very quiet. In the Far East it was limited by $11.70on the downside and $11.74 on the upside. During the European hours thesame scenario as overnight prevailed. There was very little interest in themarket until it managed to fix at $11.76 and continued its way on theupside after the opening of Comex, to reach the high of $11.91. The breakthrough the $11.90 resistance was not sustained and subsequently the whitemetal was trading 20 cents lower. Prices were retreating and recovering,following gold’s fluctuations until they finally settled at $11.775. Webelieve that in the short tem silver remains well supported by the $11.50level with $12.00 providing a major resistance on the upside.
MKS Gold & Silver, Daily Report
by Lidia Nazarova
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