(OroyFinanzas.com) – Gold barely moved overnight, hovering around $671 while bids dragged it up to the $673 level before the close. During the early London hours the metal faced some resistance above $673 but a softer dollar enabled it to sustain the $671 level.

Prices bounced after the opening of the Comex division of the NY mercantile exchange. This is due to the fact that US stocks slipped after Federal Reserve Chairman Ben Bernanke said inflation risks remain to the upside; suggesting market participants should not count on an interest rate cut spurring stocks higher in the near future. Spot also drawn support from steady Brent crude prices, remaining above $70 a barrel on news of a powerful cyclone reached the coastline of Oman, closing the main gas export terminal. As gold often moves in the opposite direction to the dollar and is generally seen as a hedge against oil-led inflation,it remained relatively solid.

Shortly before the second fixing spot dropped down to the $669 level, following the ECB which said gold and gold receivables held by the euro zone central banks fell by 29 millions euro to179.995 billion euros in the week ending June 1. According to the ECB, gold holdings fell because of sales by two euro zone central banks, which were consistent with the 2004 Central Bank Agreement. Later in the afternoon, the Institute for Supply Management’s non-manufacturing index came out. The dominant US service sector grew more than expected in May, rising to 59.7,while it was forecast to dip to 55.3 in May from 56 in April. US stocksfell after these signs of strength in the services sector. Subsequently, the yellow metal fixed at $671.50 an ounce on the second London fix, up 40cents from the previous PM one. Gold was rather quiet the rest of the afternoon session and closed on the downside of the intraday range. We believe that speculative interest in gold might provide the possibility forfurther gains, but profit taking and selling pressure seem to be capping the upside at $673-$675 at present. This resistance has to be breached in order to head higher.

Silver struggled to hold its $13.70 support on Tocom. Selling pressure took place in the morning but the afternoon saw the white metal drifting higher to close above its support. In Europe, prices were progressively gaining ground but then mirrored gold in its downside and retreated. Spot fixed at $13.71 an ounce, up 4 cents from the previous day. The metal spent the major part of the Comex session hovering between $13.70and $13.80, still supported by base metals. We think that silver is likely to remain trading within this range in the short-term.

MKS Gold & Silver, Daily Report
By Moniah El Shikh

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