Tuesday, 24-April-2007
Tocom opened with the selling pressure, which eventually took golddown to $685.80. Physical bids then started to appear around the lows,allowing the yellow metal to recover half of the Asian session’s losses. InEurope we clearly saw an uptrend throughout the whole morning with theprices gradually gaining ground and hitting the high of $691.90 about anhour before the opening of the Comex division of the New York MercantileExchange.
The strength was supported by Brent climbing above $68 per barrelas further concerns arise about the possible disruptions of Nigerian oiloutput after election results. The violence against oil industry in thecountry had already curbed about 20 percent of the OPEC nation’s totaloutput. Oil also drew support from the gasoline supply concerns in topconsumer United States ahead of the summer driving season when demandpeaks. A preliminary Reuters poll of industry analysts showed that gasolinestocks are expected to see the 11th draw in a raw in data due tomorrow.The precious metal’s upward trend however reverted as profit taking made itretreat beck below the 690 dollar mark in NY.
The European Central Banksaid in its regular weekly consolidated financial statement today that goldand gold receivables held by euro zone central banks fell by 281 millioneuros in the week ending April the 20th. The decline was due to sales bytwo euro zone central banks which was consistent with the Central Bank GoldAgreement 2004. Subsequently prices hovered in a three dollar range below$690 until a wave of selling emerged just after the second London fix of$688.40. Selling was partially related to options expirations, which tookspot down to the overnight lows of $685.80. The sharp retreat wasaccompanied by the worse than anticipated US economic data. The consumerconfidence index declined to 104.0 in April, its lowest since August 2006.According to the Conference Board that was due to rising gasoline pricesand soaring inflation expectations, which climbed to their highest sinceAugust 2006. The existing home sales also dropped sharply to 6.12million-unit rate verses 6.45 million projected for March, representing thesharpest drop since January 1989. The yellow metal made a very nice reboundof four dollars, but that was short lived as follow-through selling and adrop of a dollar in crude further extended low to $681.40. Prices haddifficulty recovering and settled on the lower side of the intraday range.We believe that gold will remain bounded by the $680-692 range in the shortterm. If the downside is once more challenged and the $680 support isbreached we might see the metal retreating to $670 levels with on the otherhand the $690-692 resistance has to be broken in order to have thepossibility to challenge the $700 psychological level.
Silver opened just above the 14 dollar mark on Tocom, but sellinginline with gold took the metal down to $13.94. The white metal howevermanaged to recover half of the intra-session losses by the settlement. InEurope silver followed exactly the same scenario as its sister metal.Prices gradually gained ground until they were faced with profit takingaround $14.05-14.07 levels from where the uptrend reversed. Spot gave awayall the gains about an hour after the opening of the Comex trading sessionwhich was then followed by a sharp drop down to $13.71. Prices hovered onthe bottom side of the intraday range for the last hour of trade. Webelieve that silver will be choppy and volatile in the coming days due tothe expiry of the May future contracts. We do not either exclude a furtherdownside correction with the major support lying at $13.50 while the keyresistance continues to be provided by $14.05 per ounce.
MKS Gold & Silver, Daily Report
By Lidia Nazarova
Disclaimer
