(OroyFinanzas.com) – Gold remained hovering around Thursday’s closing levels of $681-682 overnight, with Tocom once again being closed for holiday. In Europe the very narrow range above $680 prevailed.

There was very little interest inthe market after yesterday’s ten dollar rally on fund buying as participants were awaiting the payrolls release, which could provide clues to further US dollar direction. The yellow metal fixed at $680.80 on the first London fixing, up 4.9 dollars from the previous AM and remained stagnant until about 1:30 PM Geneva time. Prices started to gain some ground from there supported by this week’s mining strike in Peru, which is the world’s fifth largest gold producer. The national strike started on Monday to back a series of labor-related demands and is led by Peru’sNational Federation of Mining, Metallurgy and Steel Workers Federation which represents 74 unions and 22,000 workers nationwide. Unionized workers at precious metals miner Minery Yanacocha SRL, one of the world’s largest gold mines, decided to stay on the job during the national mining sector strike, but that as soon as talks have broken off they plan to go on strike as well. A union official said today that the company was trying to slow negotiations by another week and as soon as it was unacceptable they are going to present their strike notice in the regional office of the Labor Ministry today and five days later go on strike.

According to that union official the decision is definitive as soon as “there isn’t any willingness to talk”. After the opening of the Comex division of the New York Mercantile Exchange the US non-farm payrolls came out to be worse than expected. The American economy added only 88,000 jobs in April verses the forecast of 100,000. According to the labor department it was the smallest gain in more that two years and was due to the decline in employment in retail and manufacturing. The government also revised down its estimates for jobs created in March and February while unemployment rate edged 4.5percent as anticipated. The mild jobs report weighed on the dollar, which made dollar-denominated metal cheaper for investors holding other currencies. This in turn helped the yellow metal to rally. Prices jumped sharply higher and after four hours of one-way road marked the peak of$690.70, its highest since 24th of April. Spot then retreated slightly, but remained firm until the settlement.

Markets will be closed in London on Monday for the May Day bank holiday, which will restrict the liquidity and most likely increase volatility. We believe that after the resent impressive recovery and sharp gains gold might be heading higher supported by renewed buying interest and supply concerns. Some believe that prolonged negotiations to settle the strike in Peru could help the yellow metal move towards the psychological700 resistance, but that would be possible only after the breach of the first resistance around $693-695 levels. Next week the following US economic data will be out: wholesale inventories on Tuesday, FOMC announcement on Wednesday, initial jobless claims along with trade balance, import prices and budget balance due on Thursday, to finally end the week with the release of retail sales, PPI and business inventories.

Silver also was little active overnight, hovering on both sides ofthe $13.40 level. In Europe range trading prevailed with the white metal facing some resistance around $13.45 per ounce. The price action finally came around after the opening of the Comex session. Spot rallied, mirroring gold in its ascent and supported by firming copper. The metal kept gaining ground to eventually hit the high of $13.60 about two hours before the close. The grey metal however gave nearly all its intraday gains away bythe settlement of just above $13.40. We believe that silver might have the possibility of heading further North if the $13.40 level is sustained.

MKS Gold & Silver, Daily Report
By Lidia Nazarova

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