Wednesday, 21-March-2007
Gold was extremely quiet overnight with the Japanese market closedfor holiday. Prices tried to challenge $660 per ounce, but offersaccumulated around that level capped the upside. During our time zone thesame dull scenario prevailed.
The yellow metal fixed at $660.50 on thefirst London fixing and extended the high to $662 by midday. Prices thenstagnantly hovered on both sides of the 660 dollar mark with marketparticipants cautious about taking new positions ahead of the release ofthe Fed interest rate decision. Federal Reserve is widely expected to leaveinterest rates unchanged, but investors believe that interest rate cutsmight be possible some time later this year due to the concerns about theUS subprime mortgage sector. Following the deterioration in the subprimemarket many expect Fed to adjust their language slightly and take a moreneutral stance. The weekly report from Energy Information Administrationsaid today that crude inventories jumped by far more than anticipated inthe week ended March the 16th, while gasoline stocks draw was much greaterthan projected. According to the government report the fall in gasolineinventories was due to a solid demand and slow imports as refineriesstruggled to return from maintenance. The demand for the refined productsover the past month is up 4 percent over the same period a year earlier.Crude oil hardly reacted to the date release, while gold lost some groundon a slightly firmer US dollar. The precious metal fixed at $658.75 on thesecond London fixing, down 25 cents from the previous PM one and thenfurther extended the downside to $657.60. Prices recovered some of theintraday losses, but remained below the $660 level until the settlement.After the close Fed announced that the interest rates were left unchangedas expected, at 5.25 percent. We believe that gold needs to stabilize abovethe 660 psychological level in order to be able to acquire further gains.
There was clearly luck of interest in silver today, as market playersremained sidelined ahead of the FOMC announcement. Overnight pricesremained in a narrow range above $13.30, with the same picture repeating inLondon. Prior to the opening of the Comex division of the New YorkMercantile Exchange the white metal made a move on the upside, but in theabsence of any follow through was limited to $13.37. After some time ofrange trading prices followed gold in its weakness and briefly dipped belowthe 100-day moving average of $13.18. After a very boring day we finallysettled just below $13.30. We believe that as soon as the $13.18 supportholds silver has a possibility to go higher after a period ofconsolidation.
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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