Wednesday, 1-November-2006
Good buying was seen after the close of the NY session Tuesday. Goldhowever pared some of the gains acquired during access and CBOT tradingprior to Tocom opening. Spot reached the high of $608.70, where largeamount of offers limited the market’s upside.
The yellow metal drifteddown to $607 levels as the buying was over and that is where it opened inEurope. Subsequently gold experienced a progressive ascent, fixing at$611.25 on the first London fix and only briefly dipping below the $610level after the opening of the Comex division of the New York MercantileExchange. The prices gradually climbed to $615.30, previously seen on the8th of September, before fixing at $614.10 on the PM London fixing. The setof US economic data was mixed. According to the National Association ofRealtors, the pending home sales index stood at 109.1 in September verses108.1 anticipated.
The NAR’s chief economist David Lereah said that thepresent level of home sales is relatively high and that only minermovements around that level could be expected. The figures concerning theUS factory activity and construction spending appeared to be worse thanprojected. The Institute for Supply Management said that its index ofnational factory activity fell to 51.2 last month compared to 53.0forecasted, representing a slowing growth in the sector. The ISM index inOctober was the lowest since June 2003. The US construction spending alsofell by more than estimated, due to the sixth consecutive drop in theprivate residential building. A softer tone in the US dollar after the datahelped the precious metal to further extend the high to $617.30, but thatwas short lived. The US crude oil inventories rose by less than expectedand distillates along with gasoline stocks fell by more than predicted inthe week ended October the 27th. What at first looked as a bullish reportfor the oil market actually made it loose ground, as the increase in therefinery utilization meant that the product draws are only temporary.Following the EIA report the yellow metal retreated back to $615 levels andremained trading sideways in the $614-617.5 range until the close, with anexception of a brief dip down to $611 per ounce about an hour before thesession end. The prices settled on the highs.
Gold is building an upward momentum and we believe that it has thepotential of trading higher if the 100-day moving average of $608 issustained. Market participants are looking to the US payrolls data dueFriday for the signs of the dollar’s direction as soon as it appears tohave regained its position of a driving factor of the precious metal. Silver also opened higher in Asia compared to the NY close leastnight. The prices were propelled to $12.32 with funds rolling theirpositions from August to October. There was however very little interestfrom the private sector. Spot continued on the upside during the Europeantrading hours. The metal fixed at $12.36 in London, up 28 cents compared tothe one on Tuesday and then progressively extended the high to $12.53during the NY session. Subsequently the prices retreated, but remainedfirmly above the 12.30 dollar mark for the rest of the day. We believe thatsilver is able to acquire further gains if the resistance of $12.50 isbreached. The main support on the downside continues to be the $12psychological level.
MKS Gold & Silver, Daily Report
by Lidia Nazarova
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