Subsequently aggressive selling came in from the overseas traders, but that only managed to move the market by two dollars. In Europe the yellow metal continued to trade in a tight range. It fixed at$608.30 on the first London fixing, down 17.7 dollars from the previous AM one. Steep drop in oil prices on unseasonably warm weather along with rising US fuel stocks put pressure on gold. A senior OPEC delegate said today that the group’s producers are holding talks about possible further action in order to stabilize the market and want to make sure there is implementation and commitment to supply cuts. Iran’s OPEC Governor Hossein Kazempour Ardebili however thinks that the already agreed upon cuts should be sufficient to keep the balance in place until the group meets on March the 15th. Meanwhile OPEC is widely believed to be defending an undeclared target of $60 per barrel for US crude, whereas Saudi Arabia is thought to be happy with the prices anywhere between $55 and $65. A Reuters survey showed that the exporting group made little progress last month in lowering the supply, as higher output from some members offset continuing cutbacks by others. After the opening of the Comex division of the New York Mercantile Exchange oil gained more than a dollar to trade above $57 per barrel as Russia stopped supplies of 1.8 million barrels a day to Germany,the Europe’s largest economy. Russia has shut off crude exports to its western neighbors following the accusation of Belarus of stealing oil from a major pipeline. Belarusian President Alexander Lukashenko, viewed by America as Europe’s last dictator, last week imposed a $45 per ton transit fee on Russian oil pumped through Belarus. Transneft Vice-President was stated today as saying that: “the Belarusian side began taking transit oil as payment in kind for a new duty it had illegally imposed, We therefore reduced transit supplies, equal to the amount being taken.

We then reached the point where we had to stop supplies completely”. Europe is extremely reliant on Russia for its oil and gas and so is very vulnerable to supply cuts. The precious metal revisited the overnight high, but could not extend it any further as oil was unable to hold on to the gains acquired. The metal also got some support from the news of the smell of gas throughout much of Manhattan, which forced the evacuation of buildings and the suspension of a commuter train service. The New York police however stated shortly after that there was nothing harmful. Gold fixed on the peak of the day on the PM London fixing, getting underpinned by the emerging physical interest and bargain hunters, but that was short lived. Profit taking on the highs triggered a wave of selling which made spot drop sharply and extend the low to $603.80. Subsequently the prices managed to recover back to the $607-608 levels where they remained for the rest of the NY session.We believe that further sharp moves are likely and if the $600 psychological level fails to hold we might revisit $570 per ounce. We furthermore think that US dollar and oil will probably remain the key drivers of the gold market for the time being.

Silver also opened higher on access, but remained under pressure to continually drift lower in a narrow 12 cents range. Following an under performance overnight the metal managed to stabilize during the European trading after a brief dip down to $12.07 levels. The drop was backed up by copper retreating to fresh nine-month lows. Copper is used in construction, power and auto industries and has been losing ground since September on worries about the tumbling demand due to a slowing US housing market. Copper lost more than 35 percent since the record high of $8.800 a ton seen in May. The white metal however managed to recover and gradually made its way up to $12.34. A sharp sell off in gold by the late afternoon did affect silver, but it did not revisit the previously seen lows though and bounced back fairly quickly. We believe that the market lacks a clear direction and that it will remain choppy and volatile in a wide$12.00-12.34 range in the short term.

MKS Gold & Silver, Daily Report
By Lidia Nazarova

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