Gold opened slightly firmer on Tocom verses Friday’s NY closing price – MKS

( – Gold opened slightly firmer on Tocom verses Friday’s NY closing price and was bid up to $659.50 fairly quickly. The market was very thin with offers around $660 providing a resistance.

During the early London hours the yellow metal revisited the Far East low of $658.50 and then fixed overa dollar above it on the first London fixing. Price action was stagnant as light profit taking was capping the market and traders reluctant to take on new positions ahead of Federal Reserve Chairman Ben Bernanke’s congressional testimony on Wednesday. The precious metal hesitated just below the $660 resistance level for some time, despite oil prices gaining ground. Crude firmed on rising tensions over Iran, but it appeared to have at first little impact as expectations of an imminent US interest rate rut eased. The world’s fourth largest oil producer Iran said on Sunday that it would not stop its nuclear program. The seizure of the 15 UK personnel on Friday could trigger escalation in the current impasse with some viewing this situation as a possibility that Iran could use as a bargaining tool to prevent UN Security Council imposing further sanctions for not halting uranium enrichment. The UN Security Council imposed arms and financial sanctions on Iran on Saturday with the key nations at the same time offering new talks.

Iran in return said that it would partially suspend cooperation with the UN International Atomic Energy Agency and entitled the sanctions as illegal. After the opening of the Comex division of the NewYork Mercantile Exchange the yellow metal finally made it above $660 partially on the supportive for the metal comment from European Central Bank officials about the potential of higher euro zone interest rates. Emerged fund buying and the fact that the capture of the UK soldiers and marines might not be resolved quickly propelled the precious metal higher, to fix at $663 on the second London fixing. Iran said that the people it detained are well, but did not disclose where they are held. Iran is considering charging the Britons with illegally entering its waters and at the moment is interrogating them to see if they had crossed into Iranian territory on purpose or not. A spokesman for Prime Minister Tony Blair said today that genuine efforts to have discussions with the Iranians in private were made in order not to escalate tensions and that Russia along with other countries were asked to help in effort to secure the release of the people. The peak was then further extended to $664.50 as crude gained overa dollar and set a new record for this year. London Brent (LCOc1) hit $64.50 per barrel. The ascent was more over supported by the much worse than expected US new home sales in February. Sales declined for the second consecutive time, to an annual rate of 848,000 units verses 985 thousand forecasted, their lowest rate in nearly seven years. According to the government report the number of new homes on the market grew, showing more signs of weakness in the housing sector. Spot could not hold on to the gains with the prices retreating slightly off the highs, but remaining on the top side of the intraday range until the close.

We believe that gold will remain supported by the geopolitical tensions over the Iranian nuclear program, firm oil, as well as strong demand for raw commodities from China. Deutsche Bank expects above trend aggregate global growth in 2007 and 2008, driven by strong emerging market demand in China and India. Based on that key for Deutsche factor the bank raised its price predictions for industrial and precious metals. China has strong metal imports along with the current restocking of very low metal inventories by consumers. What also contributes to the bullish outlook for gold is the continued recovery in European growth rates and expectations of further improvements.

Silver was fairly quiet in Asia, supported by buying interest below $13.20, but capped by overseas traders selling around $13.25. A very stagnant range trading prevailed in Europe as well, until the opening of the NY session. Prices them jumped higher, following gold’s ascent and reached a peak of $13.40. Light profit taking on the highs made spot retreat, but it remained firmly above the $13.30 level until the settlement.

MKS Gold & Silver, Daily Report
By Lidia Nazarova


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