(OroyFinanzas.com) – Gold had a narrow three dollar range overnight, with physical buying on the dips below $683 and selling pressure above $685. In Europe the yellow metal gradually climbed to fix at $686.20 on the first London fixing, which marked the high of the day.
Market remained very quiet and subdued with the precious metal remaining faithful to the last eight days $680-694 range. After the opening of the Comex division of the New York Mercantile Exchange surprisingly strong March US durable goods orders sent the yellow metal to revisit $683 per ounce area. New orders for costly and long-lasting US made manufacturing goods climbed by 3.4 percent verses 2.5percent expected. According to the Commerce Department report the non-defense capital goods excluding aircraft that serves as a proxy for business investment also climbed 4.7 percent, representing the biggest increase since September 2004. The data shows that businesses are continuing to invest to expand operations. The Federal Reserve policy makers are closely monitoring business investment behavior, as they are concerned that if companies cut back spending it could deepen a slow down in national economic activity that began late last year.
Short covering on the dip helped gold to recover fairly quickly though with the prices hovering on both sided of the $685 until the second London fixing. Selling interest however emerged on the fix. We started trying at $685 to gradually ease and finally fix a dollar below the starting point. The PM fixing was accompanied by the release of the worse that anticipated US new home sales. Sales rose to an annual rate of 858,000 units in March verses 890 thousand estimated. The EIA report released shortly after showed that US stocks of gasoline fell sharply last week and refinery utilization dropped as the world’s largest consumer heads into summer gasoline season. Inventories of gasoline have fallen for the 11th consecutive time, down almost 15 percent since the start of February. Brent gained some ground after the release ofthe report, but this did not help the precious metal much as it remained hovering on the bottom side of the intraday range and firmed only slightly into the close.
Talks between Iranian negotiator Ali Larijani and EU foreign policy Chief Javier Solana started today in Turkey’s capital Ankara. Arriving for the talks Larijani said that “irrational” Western preconditions had thwarted diplomacy in the quest for a peaceful solution. Iran expects new ideas from EU to try and end a stand off over Tehran’s refusal to suspend uranium enrichment. The hopes for a break through were however dampened in the run-up by a new Iranian vow not to stop enrichment despite sanctions pressure from the UN Security Council. We believe that geopolitical tensions, weak US dollar and firm crude will continue providing a support, but the market seems to be caught within the $680-695 range for the time being. We think that is it crucial for gold to be able to sustain the $680 support level in order to avoid a correction down to $670.
Silver also had a tight range in Asia today. The market was capped by selling pressure around $13.80 and supported by short covering ten cents lower. During our time zone the white metal followed gold in its move onthe upside with the peak of $13.88 being hit after the opening of the NY trading session. The prices however could not hold on to the gains and revisited the overnight lows to subsequently remain fluctuating on both sides of the $13.80 level until the close. We believe that silver is likelyto remain bounded by the $13.70-14.05 range in the short term until aclearer direction is established.
MKS Gold & Silver, Daily Report
By Lidia Nazarova
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