Friday, 2-March-2007
Gold had rallied 14 percent since the beginning of the year, butmarket conditions have changed dramatically since the start of this week.Participants seemed to be reassessing their previously bullish forecasts ofa rally above $700 for the yellow metal.
Today’s price action was a one waydownward street. Spot sharply lost ground after the close of around $662.25on Thursday on funds liquidating their long positions and stops being hit.Tocom opened and remained limit down for the whole session. The emerged onthe dip physical buying interest got absorbed by fund selling and pricesplunged down to $657.70 level to remain hovering on the lows until theopening of London. In our time zone the precious metal rebounded slightlyto fix at $664 on the AM, but could not make it above that level. Today’strend was clearly a downward one with the prices making another plungelower after the opening of the Comex division of the New York MercantileExchange. Spot lost ten dollars in less than half an hour to then spend thenext two hours hovering in a two dollar range above the $650 level. Theonly US data release of the day came out to be worse than expected. USconsumer sentiment fell to 91.3 in February, hitting a five-month low asconcerns over incomes and jobs in a slowing economy weighed on confidence.Gold fixed at $651.90 on the second London fix, down 18.50 dollars from theprevious PM. The market did not wait for long before tumbling further downto hit $641 shortly before the close.
We believe that gold might tumble much lower if the $640 level failsto hold. Otherwise the market is likely to remain very choppy and volatilein the near term. Next week the following US economic data is awaited:non-manufacturing ISM on Monday; productivity, factory orders and pendinghome sales on Tuesday; ADP payrolls estimate due on Wednesday; initialjobless claims out on Thursday; to finally end the week with the release ofthe non-farm payrolls, unemployment rate, trade balance and wholesaleinventories.
Silver followed more or less the same scenario as gold. In Asia themarket was very thin with some good two way interest above the 13.50 dollarmark. The upside was however capped at $13.62. In Europe the metal at firstremained fairly quiet to fix at $13.53, down 76 cents from the previousfixing, to subsequently extend the high to $13.75. In the absence of anyfollow through buying the prices could not hold on to the gains andfollowed gold in its descent. After gradual and steady retreat spot hit$12.70 per ounce shortly before the close.
MKS Gold & Silver, Daily Report
By Lidia Nazarova
Disclaimer
