(OroyFinanzas.com) – Gold opened slightly firmer on Tocom compared to Monday’s close and was bid up to $656.25. Evident selling interest around $657 levels however capped the market, forcing it to retreat a couple of dollars. After the weak longs got liquidated the yellow metal very quietly traded in a narrow range until the close of the Asian session.

In Europe light follow through selling forced the prices to extend the overnight low to $652.80, as the Dutch central bank, DNB, said in a press release today that it sold 54 metric tons of gold in 2006. DNB stated that because of the steep rise of the price of the precious metal over the past two years the value of the Netherlands’ gold reserves increased, while the volume decreased. ECB said in its regular weekly consolidated financial statement today that gold and gold receivables held by euro-zone central banks also fell, by 256 million euros in the week ending March the 16th. The decrease in holding was due to sales by two central banks, which was consistent with the 2004 Central Bank Gold Agreement. The dip was short lived and was followed by the first London fixing of $654.40, only ten cents below the previous AM. Persistent US dollar weakness and stabilized above $60 per barrel Brent helped the yellow metal to recover the losses back to $655-656 levels prior to the opening of the Comex division of the New York Mercantile Exchange. Shortly after the only US economic data announcement was out.

The US housing starts rose to an annual pace of 1.525 million units in February, which is better than the expected 1.45 million. The month-over-month increase was the sharpest since January 2006. The building permits, which provide an indication of future construction plans, however fell by more than anticipated. The National association of Homebuilders/Wells Fargo HousingMarket Index fell to 36 in March, indicating that more builders view market conditions as poor rather than favorable. The data sent mixed signals tothe market, but half an hour later gold rallied on emerged fund buying interest. The metal was also boosted by a weaker dollar after China’s central bank governor Zhou Xiaochuan said today that the country would stop stockpiling its massive foreign exchange reserves, the bulk of which isheld in US dollars. Gold usually moves in the opposite direction to the dollar. Stops were hit around $657-658 levels, propelling spot up to $660.70. The precious metal then spent practically the entire NY session hovering on both sides of $660 per ounce. Prices however settled slightly lower, on light selling prior to the close. We believe that gold needs to be able to sustain the $657 level and stabilize above $660 in order to beable to acquire further gains.

Silver was fairly quiet in the Far East. The $13.20 per ounce clearly represented a resistance with Japanese’ selling to square their positions ahead of the National Holiday tomorrow, but short covering below that level kept the white metal range bounded. In Europe the market firmed, helped by stronger base metals. The metal fixed at $13.25, up 9 cents from the previous fix. After the opening of the NY trading session prices rallied, following gold in its ascent. The support also came from copper hitting a new three-month high and tin surging to a fresh record peak. Copper prices jumped on the expectations of a rising demand and very low inventory levels throughout the market place, which now stand at less than four days of global consumption. Silver hit the high of $13.42, but retreated slightlyon profit taking. Subsequently spot very quietly hovered on the upper side of the intraday range until the close. We believe that with the current market situation further gains are possible, but trading might be subdued ahead of the FOMC interest rate decision due tomorrow.

Please note that the Comex market will be opening and closing one hour earlier for the whole current due to the earlier change to summer time in America.

MKS Gold & Silver, Daily Report
By Lidia Nazarova

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