(OroyFinanzas.com) – Gold came under selling pressure prior to Tocom opening, which continued to the session’s low of just above $687. The yellow metal then recovered on the back of weaker US dollar, but profit taking around $689 kept capping the upside.
In Europe the precious metal lost further groundas the euro currency slipped against the dollar due to the adjustment of positions by investors ahead of central banks announcements this week. The Federal Reserve is expected to leave interest rates on hold and probably signal lower interest rates in the future, while European Central Banks is expected to signal June hike after keeping the policy steady. Some market players believe that there is nothing out there to suggest that the euro/dollar uptrend is going to turn around, while others say that they expect France’s president-elect Nicholas Sarkozy to discuss the value of the euro should the currency continue to appreciate as during its presidential campaign he repeatedly called for a weaker euro. The yellow metal fixed at $685.90 on the first London fix, up 5.1 dollar from the Friday’s AM and then slipped below $685 after the opening of the Comex division of the New York Mercantile Exchange.
The European Central Bank said in its regular weekly consolidated statement today that gold and gold receivables held by euro zone central banks fell by 186 million euros in the week ending 4th of May. The fall was due to sales by two central banks, which was consistent with the 2004 Central Bank Gold Agreement. Prices hesitated around $685 for a couple of hours until selling interest on the second London fix finally pushed them further south. The precious metal retreated down to $682.35 accompanied by a smaller than estimated rise in US wholesale inventories. According to the government report the inventories rose 0.3 percent in March while sales rose to their highest in a year and a half.
Oil prices rebounded slightly today as Fighters from the rebel Movement for the Emancipation for the Nigerian Delta (MEND) destroyed three major oil pipelines in Nigeria’s southern delta, but it did not seem to help the yellow metal much. The MEND said today that Agip’s Brass terminal had been affected, a terminal that normally exports about 200,000 barrels per day. Industry sources said they had detected oil spilling from pipelines feeding the terminal in two locations on the Brass River and expected Agip to shut down the facility or reduce through put as asafety measure during clean-up and repairs. The MEND demands local control of oil wealth in the impoverish delta and had threatened to blow up more pipelines between now and May 29 when the outgoing government is due to hand over power to its successor. Nigeria staged elections last month werewidely condemned as fraudulent and armed groups want to make it clear that they had no faith in president-elect Umaru Yar’Adua or his deputy. Analystssay that the negative oil correction that we have seen for the past six days was the longest loosing run since September and that it was aided by soaring metals markets. Even if some would expect short covering to come into the oil market, prices continue to hesitate around the $65 per barrel level in Brent as US crude stocks are anticipated to rise and the promise of increased refinery utilization could mean sufficient fuel output aheadof the peak summer demand. Gold had difficulty recovering. It fluctuated onthe bottom side of the intraday range, but firmed into the close and settled above $685. We believe that the market is likely to remain choppy ahead of the FOMC decision due tomorrow, which could provide clues tofurther US dollar direction. As from the short term point of view we think that the $680-691 range will prevail.
Silver was fairly quiet in Asia, seeing some supportive bids below$13.50 and capped by selling interest above $13.55. During our time zone the white metal followed gold in its weakness. Prices fixed at $13.48 inLondon, up 8 cents compared to the previous fix, and then continued theirway on the downside. Spot gradually lost ground, also weighed upon by easing copper. The news of the largest Peruvian miners’ federation called an end to a five-day nationwide strike on Friday subdued positive sentiment, despite the fact that several sites continued striking to push their own demands. Copper also slipped due to the drying up physical demand at these currently elevated levels. Silver tumbled to the low of $13.32, managing to sustain the 100-day moving average of $13.30 where short covering emerged. The white metal remained weak and managed to regain the$13.40 important level only an hour before the close to finally settle onthe top side of the intraday range. We believe that in the short termsilver will remain bounded by the $13.40-13.60 range.
MKS Gold & Silver, Daily Report
By Lidia Nazarova
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