Thursday, 26-April-2007
Japanese market players had hardly any interest today as they couldhardly wait until the National Holidays next week, on Monday, Thursday andFriday. Gold hovered in less that a two dollar range on Tocom with sellingabove $686 capping the upside.
In Europe the scenario barely changed.Prices remained sidelined above $685 and extended the overnight high to$686.90 just after the first London fixing. The yellow metal then startedto loose ground on firmer UD dollar. The euro currency’s failure to reachfresh record highs against the greenback tempted investors to buy back theUS dollar across the board. Dollar’s recovery made the precious metal moreexpensive and so triggered selling. Another factor that backed the metal’sweakness was the strength in the Dow Jones industrial average which crossed13,000 for the first time yesterday and so attracted more money into thestock market. Crude also slipped, on the news of a possibility of somewhateasing tensions over Iranian nuclear program. Iranian nuclear negotiatorAli Larijani said today that Iran and EU were nearing “a united view” insome areas of their talks to break the impasse over Tehran’s nuclear fuelprogram. European Union foreign policy Chief Javier Solana said that talkshad been constructive and conducted in good atmosphere, but theconversation was more about the mechanics of getting back into talks withsome progress being made.
Diplomats say that the key to a breakthrough isfinding a definition of an enrichment suspension that both sides couldtolerate. Despite the positive signs in Ankara senior officials in Tehranhowever continue to insist on the fact that Iran would strike US interestsaround the world and Israel if attacked over its nuclear program. Backed byBrent’s slide gold dropped five dollars to try and breach the $680important support level prior to the opening of the Comex division of theNew York Mercantile Exchange. Subsequently prices fluctuated on both sidesof that level, but plunged lower shortly after as US initial jobless claimsdata came out much better than expected for the week ended on the 21st ofApril. The number of US workers filling new claims for jobless benefitsfell to 321 thousand verses 330,000 projected. According to the LaborDepartment report there were no special factors behind the drop. Sellingaccelerated after breaking below the $680 technical level and the preciousmetal headed lower on continuing firming of the US dollar which liberatedfrom the downward pressure from the expectations of an interest rate cut inthe near future. Central banks are growing less fixated on the importanceof that key benchmark. In recent speeches Fed officials have argued thatwhat was increasingly important to them is public confidence that centralbanks will act to restraint inflation pressures. The yellow metal reached atwo-week low of $673.10 followed by the second London fix of below the spotmarket, at $673. Prices then rebounded slightly, but another wave ofselling shortly after further extended the downside to $671.50. The metalremained weak for the last hour of trade and settled at $675.25. We believethat if the $670 level is breached gold might be heading towards $650 withon the other hand the first resistance now being provided by $680 perounce.
Silver was also very quiet on Tocom. There was hardly any range withthe prices reaching the high of $13.82 and the low of $13.80. During theearly European hours the same stagnant scenario persisted until aboutmidday when the trend turned clearly bearish. Copper failed to break abovea critical resistance of $8,100, which boosted selling pressure on thosewho were holding long positions after a four-day strike in Indonesia lastweek sent it to its highest levels in seven months. Copper dropped threepercent dragging silver with it. This one-way downside road continuedthroughout the NY trading session with spot eventually reaching the low of$13.20. The white metal only fractionally recovered the intraday losses andclosed Comex session on the lower side of the range. We believe that silvercould drop further if the $13.40 important technical level is not regained.
MKS Gold & Silver, Daily Report
By Lidia Nazarova
Disclaimer
