(OroyFinanzas.com) – Gold opened three and a half dollars higher on Tocom compared to Friday’s close. Subsequently fund buying progressively pushed the prices higher, overcoming the $624 resistance and ending the Asian session on the peak. In the absence of access or CBOT and London being closed for holiday the yellow metal saw some profit taking in the illiquid ecomex market, but bounced back up straight after the opening of NY trading.
The sharp move higher was prompted by short covering following a long weekend and according to the vice president with RBC Capital markets Global Futures the ongoing European fund buying. The jump has accrued in very thin volumes and so might have been a bit exaggerated. The peak was extended to $629.70, the highest level in 11 days, but the gains could not be sustained as Brent collapsed nearly two dollars and put a downside pressure on the metal. Earlier on crude traded above $63 per barrel, helped by the uncertainty linked to Iran and its warning that the country could use its oil exports as a weapon following the UN Security Council’s decision on Saturday to impose sanctions on Tehran’s trade in nuclear materials and technology. Iran being the world’s fourth largest crude producer condemned there solution and promised to speed up nuclear enrichment work. The possibility of supply distortion did not prevent from profit taking and oil collapsed dragging gold with it. Spot retreated towards $626 levels and spent the rest of the Comex hours hovering on both side of it, but weakened into the close. We believe that the market will remain choppy and that further sharp retreats and recoveries are possible due to the lack of liquidity. We also continue to think that in the short term the precious metal will remain within the $612-630 range.
Silver also opened higher in the Far East and was fairly aggressively bought to end the session on the peak of $12.76. During our time zone the prices lost ground as profit taking emerged on the electronic trading, but the white metal revisited the highs seen overnight after the opening of the Comex division of the New York Mercantile Exchange. Despite the dip due to the selling pressure spot did not come anywhere near to the $12.50 support, which it had difficulty to settle above on Friday. By the end of the NY trading hours the grey metal followed gold in its softer tone and extended the intraday low to $12.63. We continue to believe that silver will be volatile, but enclosed within the wide $12.28-13.00 range for the short term.
MKS Gold & Silver, Daily Report
by Lidia Nazarova
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