Gold firmed after NY close Wednesday, but failed to break above $652 – MKS

(OroyFinanzas.com) – Gold firmed after NY close Wednesday, but failed to break above $652 as offers around that level capped the upside. Spending a very calm Asian session, the yellow metal closed slightly above the $650 key level.

In Europe prices tried to sustain that level and fixed at $650.75 on the first London fix, up $6.65 from the previous AM one. The dollar hit a 4-1/2-yearpeak against the yen today and steadied against the euro, extending gainsafter strong US retail sales data the day before reinforced expectations the Federal Reserve would not cut interest rates this year. Selling forced prices down to the $648 levels and the downtrend continued after the opening of the Comex division of the NY Mercantile exchange. The metal looked heavy after the first set of US economic data came out. The number of workers signing up for a first-time unemployment benefits was unchanged last week at a seasonally adjusted 311,000. Economists were expecting jobless claims to inch up to 312,000 after a previously reported 309,000 claims the prior week. Another Labor Department report showed that higher energy costs boosted producer prices 0.9 percent in May and excluding volatile food and energy costs, prices paid at the factory gate were up a more moderate 0.2 percent.

The expectation was for a 0.6 percent rise and a0.2 percent when energy and food were stripped out.  Subsequently gold bounced back and regained the $650 level, eventually reaching the peak of$654. However the $655 resistance was once again fruitlessly challenged despite Brent support. Indeed, oil rose above $70 a barrel on rising tensions in the Middle East and supply concerns in the United States. TheEnergy Information Administration said that US pump prices will remain high this summer because gasoline inventories will be tight throughout the busy driving season. By the late afternoon spot fixed at $653.25 on the second London fix, up $5.6 from the previous PM one. Technical selling however once more did not let the metal to sustain that level and prices dipped 3 dollars lower. Gold spent the last couple of hours hovering above $650 and settled near the high of the day. For the fourth consecutive day the precious metal could not break out of its current $645/$655 range. We believe that gold continues to be vulnerable to further downside correction if enough follow-through selling takes the market below $645 level for good.

Silver hovered on both sides of the $13.10 in the Far East, but buying interest was not able to take prices much higher. Due to the strength in USD/YEN spot could gain some ground and close the Asian session on the upper side of the intraday range. During the early European hours silver followed the same pattern as gold, slipping lower after its fixing of $13.04. Industrial metals prices steadied today as fears about rising interest rates subsided and the market was supported by looming strikes at mines. The strike at two mines in Peru looked imminent as no agreement had been reached yet, supporting copper prices. Silver then turned around and the Asian high was once more revisited during the Comex trading hours. The white metal finally settled above $13.10. We believe that silver could drop further if the $13 important technical level is not sustained.

MKS Gold & Silver, Daily Report
By Moniah El Shikh

© OroyFinanzas.com

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Marion Mueller

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