Tuesday, 20-March-2007
Gold opened slightly firmer on Tocom compared to Monday’s close andwas bid up to $656.25. Evident selling interest around $657 levels howevercapped the market, forcing it to retreat a couple of dollars. After theweak longs got liquidated the yellow metal very quietly traded in a narrowrange until the close of the Asian session.
In Europe light follow throughselling forced the prices to extend the overnight low to $652.80, as theDutch central bank, DNB, said in a press release today that it sold 54metric tons of gold in 2006. DNB stated that because of the steep rise ofthe price of the precious metal over the past two years the value of theNetherlands’ gold reserves increased, while the volume decreased. ECB saidin its regular weekly consolidated financial statement today that gold andgold receivables held by euro-zone central banks also fell, by 256 millioneuros in the week ending March the 16th. The decrease in holding was due tosales by two central banks, which was consistent with the 2004 Central BankGold Agreement. The dip was short lived and was followed by the firstLondon fixing of $654.40, only ten cents below the previous AM. PersistentUS dollar weakness and stabilized above $60 per barrel Brent helped theyellow metal to recover the losses back to $655-656 levels prior to theopening of the Comex division of the New York Mercantile Exchange. Shortlyafter the only US economic data announcement was out. The US housing startsrose to an annual pace of 1.525 million units in February, which is betterthan the expected 1.45 million. The month-over-month increase was thesharpest since January 2006. The building permits, which provide anindication of future construction plans, however fell by more thananticipated. The National association of Homebuilders/Wells Fargo HousingMarket Index fell to 36 in March, indicating that more builders view marketconditions as poor rather than favorable. The data sent mixed signals tothe market, but half an hour later gold rallied on emerged fund buyinginterest. The metal was also boosted by a weaker dollar after China’scentral bank governor Zhou Xiaochuan said today that the country would stopstockpiling its massive foreign exchange reserves, the bulk of which isheld in US dollars. Gold usually moves in the opposite direction to thedollar. Stops were hit around $657-658 levels, propelling spot up to$660.70. The precious metal then spent practically the entire NY sessionhovering on both sides of $660 per ounce. Prices however settled slightlylower, on light selling prior to the close. We believe that gold needs tobe able to sustain the $657 level and stabilize above $660 in order to beable to acquire further gains.
Silver was fairly quiet in the Far East. The $13.20 per ounce clearlyrepresented a resistance with Japanese’ selling to square their positionsahead of the National Holiday tomorrow, but short covering below that levelkept the white metal range bounded. In Europe the market firmed, helped bystronger base metals. The metal fixed at $13.25, up 9 cents from theprevious fix. After the opening of the NY trading session prices rallied,following gold in its ascent. The support also came from copper hitting anew three-month high and tin surging to a fresh record peak. Copper pricesjumped on the expectations of a rising demand and very low inventory levelsthroughout the market place, which now stand at less than four days ofglobal consumption. Silver hit the high of $13.42, but retreated slightlyon profit taking. Subsequently spot very quietly hovered on the upper sideof the intraday range until the close. We believe that with the currentmarket situation further gains are possible, but trading might be subduedahead of the FOMC interest rate decision due tomorrow.
Please note that the Comex market will be opening and closing onehour earlier for the whole current due to the earlier change to summer timein America.
MKS Gold & Silver, Daily Report
By Lidia Nazarova
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