In Europe spot rebounded to fix at $630.5 on the first London fix, down 6.25 dollars compared to the one on Wednesday. After that the metal traded in a hardy existent, extremely narrow range with the announcement of the European Central Bank as expected raising interest rates to 3.5% not able to move the market, as participants were awaiting the post-decision news conference for clues about the future policy. After the opening of the Comex division of the New York Mercantile Exchange the US initial jobless claims data was out. The number of workers seeking first time jobless claims decreased as anticipated, to a seasonally adjusted 324,000 in the week ended on the 2nd of December. The four-week moving average, which is estimated to be a better gauge of labor trends, moved up for the sixth straight weekly gain to hit its highest since May.

The yellow metal finally did bounce up to slightly extend the high to $632.50 as euro spiked 30 ticks to 1.3320. The jump came after the ECB president Trichet stated that the interest rates are low and that developments must be monitored closely. Gold’s price ascent was short lived through, as some believe that the euro currency’s recent strength has reduced room for further hikes. The precious metal extended the morning low due to the crude not able to hold onto gains initially made. The weakness persisted over the PM London fixing. Greater amount of sellers then buyers forced the price to fix 75 cents below the one at which we started trying. The downside did not stop there and the market gradually slid to $624.70. The yellow metal managed to recover back above the $630 level and settled there.

We believe that the US dollar fluctuations will remain the main driver of the gold market with the players awaiting for the release of US non-farm payrolls due tomorrow for clues in the direction. We think that the metal will remain volatile with the 200-day moving average of $614 providing a firm support and $650 a resistance.

Silver followed the same scenario as gold. The metal was sold off on the electronic trading prior to the opening of the Far East session and lost further ground during Tocom hours. Prices breached the $13.50 support level, but managed to rebound on the emerged buying. In Europe the overnight losses were recovered and the price fixed at $13.67 in London, the peak which was extended by 3 cents after the opening of Comex. Subsequently spot followed the sister metal’s descent, but outperformed gold and did not revisit or extend the Asian lows. The white metal also did better in its recovery as it expended the intraday range on the upside and closed firmly above the $13.70 level. We believe that silver will remain enclosed by the $13.50-14.20 range for the short term.

MKS Gold & Silver, Daily Report
by Lidia Nazarova

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