Monday, 26-March-2007
Gold opened slightly firmer on Tocom verses Friday’s NY closing priceand was bid up to $659.50 fairly quickly. The market was very thin withoffers around $660 providing a resistance.
During the early London hoursthe yellow metal revisited the Far East low of $658.50 and then fixed overa dollar above it on the first London fixing. Price action was stagnant aslight profit taking was capping the market and traders reluctant to take onnew positions ahead of Federal Reserve Chairman Ben Bernanke’scongressional testimony on Wednesday. The precious metal hesitated justbelow the $660 resistance level for some time, despite oil prices gainingground. Crude firmed on rising tensions over Iran, but it appeared to haveat first little impact as expectations of an imminent US interest rate ruteased. The world’s fourth largest oil producer Iran said on Sunday that itwould not stop its nuclear program. The seizure of the 15 UK personnel onFriday could trigger escalation in the current impasse with some viewingthis situation as a possibility that Iran could use as a bargaining tool toprevent UN Security Council imposing further sanctions for not haltinguranium enrichment. The UN Security Council imposed arms and financialsanctions on Iran on Saturday with the key nations at the same timeoffering new talks. Iran in return said that it would partially suspendcooperation with the UN International Atomic Energy Agency and entitled thesanctions as illegal. After the opening of the Comex division of the NewYork Mercantile Exchange the yellow metal finally made it above $660partially on the supportive for the metal comment from European CentralBank officials about the potential of higher euro zone interest rates.Emerged fund buying and the fact that the capture of the UK soldiers andmarines might not be resolved quickly propelled the precious metal higher,to fix at $663 on the second London fixing. Iran said that the people itdetained are well, but did not disclose where they are held. Iran isconsidering charging the Britons with illegally entering its waters and atthe moment is interrogating them to see if they had crossed into Iranianterritory on purpose or not. A spokesman for Prime Minister Tony Blair saidtoday that genuine efforts to have discussions with the Iranians in privatewere made in order not to escalate tensions and that Russia along withother countries were asked to help in effort to secure the release of thepeople. The peak was then further extended to $664.50 as crude gained overa dollar and set a new record for this year. London Brent (LCOc1) hit$64.50 per barrel. The ascent was more over supported by the much worsethan expected US new home sales in February. Sales declined for the secondconsecutive time, to an annual rate of 848,000 units verses 985 thousandforecasted, their lowest rate in nearly seven years. According to thegovernment report the number of new homes on the market grew, showing moresigns of weakness in the housing sector. Spot could not hold on to thegains with the prices retreating slightly off the highs, but remaining onthe top side of the intraday range until the close.
We believe that gold will remain supported by the geopoliticaltensions over the Iranian nuclear program, firm oil, as well as strongdemand for raw commodities from China. Deutsche Bank expects above trendaggregate global growth in 2007 and 2008, driven by strong emerging marketdemand in China and India. Based on that key for Deutsche factor the bankraised its price predictions for industrial and precious metals. China hasstrong metal imports along with the current restocking of very low metalinventories by consumers. What also contributes to the bullish outlook forgold is the continued recovery in European growth rates and expectations offurther improvements.
Silver was fairly quiet in Asia, supported by buying interest below$13.20, but capped by overseas traders selling around $13.25. A verystagnant range trading prevailed in Europe as well, until the opening ofthe NY session. Prices them jumped higher, following gold’s ascent andreached a peak of $13.40. Light profit taking on the highs made spotretreat, but it remained firmly above the $13.30 level until thesettlement.
MKS Gold & Silver, Daily Report
By Lidia Nazarova
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