Tuesday, 31-October-2006
Gold opened lower in Asia after a seven-week high of $610.5 reachedMonday. From $604 opening levels the metal gradually drifted lower, asgeneral public was taking profits. A firm support was however found nearthe 600 dollar mark. In Europe the yellow metal slipped towards the FarEast lows again as oil prices held below $60 per barrel, to fix at $600.90on the first London fixing, down 3.85 dollars compared the previous AM.
Profit taking continued weighing on the spot, forcing it down to $598.5after the opening of the Comex division of the New York MercantileExchange. The dip below the $600 important psychological level was brief,but the prices hesitated for a while around there. The precious metalfinally picked up as buying emerged on the second London fix, to jump to$607 per ounce on the follow through interest. The rally was accompanied bythe Chicago business barometer falling to 53.5 verses 58.0 anticipated,showing an unexpected drop in October Midwest business activity. Theconsumer confidence also came out to be worse than estimated. The US dollarpared gains, helping the yellow metal’s upside move. The European CentralBank said today that gold and gold receivables in the Eurosystem of centralbanks declined by 65 million euros in the week ended on the 27th ofOctober. The decline in the metal reserves was due to the selling by twocentral banks, which was consistent with the Central Bank Gold Agreement of2004. The precious metal traded sideways within a three dollar range above$603 level for the rest of the NY session despite ICE Brent crude futuresfalling more than a dollar to its lowest level this year as doubts overOPEC cuts persist.
Gold seems to be stabilizing and building a base around the $600psychological support level before heading towards a sustainable breakabove the 100-day moving average of $608. We believe that crude oil islikely to remain one of the key drivers of this market for the time beingand that the US crude inventory data due tomorrow will be closely watched.Meanwhile the tensions over the North Korea nuclear ambition seem to becalming down, as the country has agreed to return to six-party talks.Senior US official said today that Washington hopes a new round of talkswill be held before year’s end. The six-party talks involve United States,South Korea, Japan, Russia, China and North Korea and they have beendeadlocked since a year now. North Korean however has a pre-condition inreturning to talks, which is a lift of all financial sanctions against itby US.
Silver also opened lower on Tocom and when it was offered below$12.10 level, stop loss selling pushed the prices further down to $12.03.In London the white metal at first remained bounded by a ten cents rangeand fixed at $12.08, down from $12.13 of yesterday. Spot dropped to $11.93per ounce after the opening of the NY trading session, following gold’sweakness. Subsequently the prices recovered and extended the high to $12.23shortly before the Comex close. We think that silver has the potential fortrading higher if the $12 level is sustained.
MKS Gold & Silver, Daily Report
by Lidia Nazarova
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