(OroyFinanzas.com) – Gold drifted lower after Tuesday’s close. The Tocom session was extremely quiet overnight with very small volume traded within a dollar range. In Europe, the precious metal remained relatively firmly above the $670 level during the first couple of hours, but dipped below it before the first London fix of $670.90.
The partial reason for the weakness lies in oil prices, which softened on news that Nigerian protesters ended their occupation of an oil hub in the world’s eighth biggest exporter. The downside was also favored due to the announcement by IMF that it intended to sell 400 tons of its gold reserves (one eight of its 3,217 tons) in the coming days to help defray a drop in income following the opening of the Comex division of the NY Mercantile Exchange the market started to loose further ground US Commerce Department report that came out shortly after showed that the pace of US home construction advanced by 2.5 percent inApril to a rate that beat analysts’ expectations, while building permit fell to the lowest pace in nearly a decade. Indeed, housing starts hit anannual pace of 1.528 million, while analysts were expecting a 1.490 million pace. Although the data offered a mixed picture of the housing sector,following these figures US stocks opened up higher on investor perceptions that the housing market may be stabilizing and the dollar rose to a three-month high versus the yen.
The scenario for gold during the NYsession was a one-way downward street. Prices tumbled towards the $667, accompanied by a bigger-than-expected 0.7 percent jump in US April industrial output. The increase was due to the gains in utilities, auto and high-tech manufacturing output. Supplementary downside pressure was exercised by a drop over a dollar in Brent as an Energy Information Administration (EIA) report showed that US crude oil and gasoline inventories rose a more-than- expected, 1 and 1.7 million barrels respectively. By the late afternoon gold dropped below the $665 crucial level, triggering stops, which forced it to the lows of $660.20. The precious metal settled on a weak note. We believe that the yellow metal could be vulnerable to further correction if the $660 support fails to hold.
Silver also lost some ground opening in Tocom three cents lower. The white metal looked unsure hovering around the $13.20 which seemed to attract substantial selling orders and capping the upside. During the early European hours the market remained range bounded and then followed gold inits descent. Prices were gradually slipping lower until a sharp move below$13 by the later afternoon took the white metal to $12.85. We believe that silver is likely to follow gold if it was to undergo further correction,with the first support lying around $13.70.
MKS Gold & Silver, Daily Report
By Moniah El Shikh
© OroyFinanzas.com