(OroyFinanzas.com) – Gold was bid throughout the Tocom session on continued short covering. Prices eventually hit the high of $690 and settled there. During our time zone the resistance of $690 to $691 was challenged several times, but every time the yellow metal failed to breach it due to profit taking atthese levels.

The precious metal fixed at $690.40 on the first London fixing, up 2.4 dollars from the previous one, but then gave all the gains away to extend the low to $686.20 after the opening of the Comex division of the New York Mercantile Exchange. For the whole NY trading session prices were recovering on weaker US dollar and retreating on selling pressure near the highs. The dollar touched a 26-year low against sterling today and traded near a record low verses the euro. Despite that the softer US dollar makes gold cheaper for investors holding other currencies, it did not seem to help the yellow metal much as it could not break out of the four dollar range. The dollar weakness can be partially explained by the diminished expectations for US rate cuts which contrasted with prospects for monetary tightening in Europe and Asia. The only excitement of the day was the release of the Energy Information Administration report for the week ended on the 13th of February. The data showed that crude along with distillate and gasoline inventories were down by more than expected. Gasoline inventories fell for the 10th week, putting the US stockpiles more than 13 percent below early February levels and standing at their lowest levels since the week of October 28, 2005.

On the other hand the US refinery utilization rose to 90.4 percent, which would mean more gasoline supply in the future. Brent lost over a dollar after the data announcement, forcing the precious metal back to the lows. Overall it was another very quiet day with the prices capped within the $686-690 range. We believe that gold needs to break out of the current range in order to be able to establish a clearer direction. We however continue to think that the metal has the possibility to head towards the $700 major psychological resistance after a firm base is build.

Silver followed exactly the same scenario as gold. After opening around $13.90 levels on Tocom prices gradually headed north and settled on the highs of the Far East session, just above the 14 dollar mark. In Europe further upside was challenged, but as well as for the past four days a firm resistance from $14.05 to $14.10 levels capped the market. Prices then headed south and after the opening of the NY trading session hit the low of$13.90. For the rest of the Comex hours the white metal fluctuated within a ten cent range below $14 without enough interest out there to help it stabilize above this important psychological level. Meanwhile copper continues to hover around 10-month high on fund technical buying and uncertainty about the situation in a large Indonesian mine. There is a potential for labor unrest at Freeport-McMoRan Copper & Gold Inc.’s Grasberg mine in Indonesia, where a labor group for native Papuan employees was said to be preparing a protest over advancement opportunities. We believe that firm base metals should continue to provide a support, but in order for silver to get on a clear upper trend the metal has to consolidate above the $14 level.

MKS Gold & Silver, Daily Report
By Lidia Nazarova

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