(OroyFinanzas.com) – Gold drifted lower after yesterday’s close, opening in the Far East at the $658 level. With very thin volume traded overnight, the metal was little active. In Europe gold started its trading session on the highsin the morning, followed by a drop down to $657.6 and a subsequent turnaround.

The precious metal fixed at $659.20 on the first London fixing,down $4.20 from the previous AM one. After the opening of the Comexdivision of the NY Mercantile exchange gold jumped sharply a couple ofdollars higher, eventually reaching the high of $663.60. Brent crudeclimbed towards $70 as US warships put on a show force off Iran’s coast.Indeed, nine US warships carrying 17,000 personnel entered the Gulf, thelargest daytime assembly of ships since the 2003 Iraq war. Although someanalysts think that this is more a symbolic show of force than anythingelse, the threat was however important enough to underpin oil and goldmarkets. Meanwhile the US dollar slipped against most major currencies,after the minutes from the Bank of England came out showing policymakerswere unanimous in voting for this month’s interest rate hike. As a weakerdollar makes gold cheaper for holders of other currencies, the preciousmetal found some support there. After the PM London fix the EIA weeklyreport came out. Despite a greater than expected gain in inventories andcrude loosing some ground (US gasoline supplies rose by 1.5 million barrelswhile crude stock rose by 2million barrels), gold remained firm, trying tochallenge the $665 resistance by the late afternoon. Prices subsequentlyended the session on a positive note. We believe that the precious metalhas the possibility of heading further North if the $660 is sustained.

Silver tracked gold movement in Asia, trading in a narrowrange. During the early European hours the grey metal challenged the upsidebut then dipped below the $12.90 resistance. It however recovered to fix at$12.96 an ounce. Spot mirrored gold in its ascent and firmed during theComex trading session to regain the $13 level. After a while, buyinginterest propelled spot up to the $13.13 and prices closed on the upperside of the intraday range. We believe that silver will remain rangebounded, consolidating within the $12.90-13.20 range in the short term

Source: MKS Finance SA – Geneva

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