(OroyFinanzas.com) – Gold was sold down on Tocom due to the euro currency dipping below the $1.30 level again. The metal however retreated only about a dollar from the Asian opening levels as soon as there wasn’t any follow through. Spot tried to challenge the upside during the early European hours again, but as well as during the Far East session it was limited to $613.10.

The yellow metal then fixed at $610.75, down 1.25 dollars compared to the previous AM fix, which was followed by another fruitless attempt to break higher. After the opening of the Comex division of the New York Mercantile Exchange the US trade deficit was announced to have unexpectedly narrowed in November, to its lowest level since July 2005. According to the Commerce Department the shrink in the gap was due to the drop in oil imports and increase in exports as a weaker dollar made American products more attractive.

Following the data US dollar gained ground and sent the precious metal sharply lower. Oil added to the downside pressure as it was hovering close to the 19 months low reached on Tuesday. Crude oil market looks heavy with some facts not at all acting in its favor. The tanker tracker Petro logistics report stated that after the two supply cuts by OPEC the actual December output increased by about 100,000 barrels per day. Another weighing factor is that the Belarusian government decided to scrap transit duties on Russian oil today so that crude supplies to Europe could be resumed tomorrow. The PM London fixing was choppy. We started trying as low as $607.25, then as high as $609.25, to finally fix at $608.40. The fix was accompanied by a much stronger than anticipated US November wholesale inventories, they were up 10.6 percent compared to a year ago and represented the biggest year-on-year rise since April 2005. The followed US crude and fuel inventory figures brought even more confusion to an already perplexed market. The government report showed that US fuel supplies surged last week, while crude stocks fell by more than estimated. Straight after the release gold jumped two dollars and in the second that followed tumbled down to $606.20. Subsequently the prices stabilized around $611-612 levels despite Brent extending one and a half year lows reached yesterday. We believe that the yellow metal needs to break either side of the recent 605-621 range in order to establish a clear direction.

Silver remained firm in Asia even though it was unable to trade above $12.50. In Europe the metal was quiet, solidly holding above the 100-day moving average of $12.34. Another unsuccessful attempt to break higher was made shortly before the opening of Comex, after which the prices plunged mirroring gold’s weakness. Spot eventually reached the low of $12.21. The white metal recovered most of the losses by the late afternoon, helped by rebounding copper. Copper bounced up after several sessions of constant weakening as bargain hunters entered the market, gaining nearly 3 per cent from Tuesday’s $5,625 close. Copper lost over 10 percent since the start of 2007 due to concerns about slowing growth and rising stocks. A lack of a clear direction remains evident and we believe that a period of consolidation is needed before any further gains could be sustained.

MKS Gold & Silver, Daily Report
By Lidia Nazarova

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