Thursday, 19-October-2006
Gold edged higher on access to open two dollars above the NY closingprice on Tocom. Weaker crude oil had however capped that market and pricesdrifted below $590 level again. In Europe the yellow metal remained in itssideways pattern as the opinion of the OPEC members for cutting productionof the group still differed.
Some believed that the cut should be from theactual production and others, like Iran wanted OPEC to cut production fromthe official quotas. OPEC president Edmund Daukoru said that the group mustissue a clear and credible statement after today’s meeting. The metal fixedat $589.75 on the first London fixing, down 5.5 dollars from the previousAM one. Spot hovered in a narrow range until it dipped down to $586.70after the opening of the Comex division of the New York MercantileExchange. The first US economic data release, out shortly after, was betterthan expected.
The US initial jobless claims fell to seasonally adjusted299,000workers in the week ended October the 14th verses 312,000 estimated.The four-week moving average of new claims, which is viewed as a moreaccurate indicator of longer term labor conditions, fell to its lowest innearly four months. Buying emerged on the lows helping the market torecover and extend the intraday high. Prior to the second London fixingtime Saudi Arabian Oil Minister Ali al-Naimi stated that he supportedOPEC’s cut of a million barrels per day from the actual production as of1st of November. The minister also added that the group could cut outputfurther when it meets in Nigeria on the 14th of December if that would benecessary to restore the equilibrium in the oil market. Saudi commentsboosted oil prices which in tern pushed gold to a 16-day high of $601. The$600 psychological level could not be sustained though and we retreated tofix at $597.25, up $3.25 compared to the PM of yesterday. At the same timethe US leading indicators came out to be worse than anticipated, a rise of0.1 percent verses +0.3 percent forecasted. Subsequently the price actioncalmed down and the market was very quietly drifting up and down within the$596-599 range. About an hour before the close crude gained more than adollar providing the precious metal with a support to make another attemptto break above $600 per ounce, which was however unsuccessful. We believethat the $602, 200-day moving average, needs to be breached in order tohave a possibility to acquire further gains.
Silver had a very boring day in Asia. The metal once again had anarrow trading range and it failed to break above $11.80. In Europe atfirst the picture did not differ much from the one in the Far East untilspot plunged down to $11.61 and fixed only one cent above the low. Afterthe opening of NY trading prices recovered following gold’s rally. Thewhite meal surged above the $12 resistance level and remained hoveringaround it for most of the remaining session. Spot extended the high to$12.10 in the evening, before settling at $12.075. We believe that silverneeds to sustain and stabilize above the $12 level in order to be able tohead higher.
MKS Gold & Silver, Daily Report
by Lidia Nazarova
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