(OroyFinanzas.com) – Tocom opened with the selling pressure, which eventually took gold down to $685.80. Physical bids then started to appear around the lows, allowing the yellow metal to recover half of the Asian session’s losses. In Europe we clearly saw an uptrend throughout the whole morning with theprices gradually gaining ground and hitting the high of $691.90 about an hour before the opening of the Comex division of the New York Mercantile Exchange.

The strength was supported by Brent climbing above $68 per barrel as further concerns arise about the possible disruptions of Nigerian oiloutput after election results. The violence against oil industry in the country had already curbed about 20 percent of the OPEC nation’s total output. Oil also drew support from the gasoline supply concerns in top consumer United States ahead of the summer driving season when demand peaks. A preliminary Reuters poll of industry analysts showed that gasoline stocks are expected to see the 11th draw in a raw in data due tomorrow. The precious metal’s upward trend however reverted as profit taking made it retreat beck below the 690 dollar mark in NY.

The European Central Banks aid in its regular weekly consolidated financial statement today that gold and gold receivables held by euro zone central banks fell by 281 million euros in the week ending April the 20th. The decline was due to sales by two euro zone central banks which was consistent with the Central Bank Gold Agreement 2004. Subsequently prices hovered in a three dollar range below $690 until a wave of selling emerged just after the second London fix of$688.40. Selling was partially related to options expirations, which took spot down to the overnight lows of $685.80. The sharp retreat was accompanied by the worse than anticipated US economic data. The consumer confidence index declined to 104.0 in April, its lowest since August 2006. According to the Conference Board that was due to rising gasoline prices and soaring inflation expectations, which climbed to their highest since August 2006. The existing home sales also dropped sharply to 6.12 million-unit rate verses 6.45 million projected for March, representing the sharpest drop since January 1989. The yellow metal made a very nice rebound of four dollars, but that was short lived as follow-through selling and a drop of a dollar in crude further extended low to $681.40. Prices had difficulty recovering and settled on the lower side of the intra day range.We believe that gold will remain bounded by the $680-692 range in the short term. If the downside is once more challenged and the $680 support is breached we might see the metal retreating to $670 levels with on the other hand the $690-692 resistance has to be broken in order to have the possibility to challenge the $700 psychological level.

Silver opened just above the 14 dollar mark on Tocom, but selling inline with gold took the metal down to $13.94. The white metal however managed to recover half of the intra-session losses by the settlement. In Europe silver followed exactly the same scenario as its sister metal.Prices gradually gained ground until they were faced with profit taking around $14.05-14.07 levels from where the uptrend reversed. Spot gave away all the gains about an hour after the opening of the Comex trading sessionwhich was then followed by a sharp drop down to $13.71. Prices hovered onthe bottom side of the intraday range for the last hour of trade. We believe that silver will be choppy and volatile in the coming days due tothe expiry of the May future contracts. We do not either exclude a further downside correction with the major support lying at $13.50 while the key resistance continues to be provided by $14.05 per ounce.

MKS Gold & Silver, Daily Report
By Lidia Nazarova

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