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Japanese were on the sell side on the opening of Tocom, but gold managed to hold – MKS

(OroyFinanzas.com) – Japanese were on the sell side on the opening of Tocom, but gold managed to hold above $649 in Asia and settled in this area. In Europe prices were pushed up to the $651 level while fixing at $650.50 on the first London fix, $2 higher than the previous AM one.

Security concerns after terror attacks in the UK, as well as a sharp drop in the dollar and a stronger euro helped gold hit a one-week high. Indeed, security fears cameto the fore again after Britain raised its security rating to its highest level after failed car-bombing attempts in London and an attack on aScottish airport. As gold is often used as a hedge against global economicand geopolitical uncertainty, prices found there a solid support. Regarding the currencies, the US dollar slumped to a seven-week low against the euroand fell against other major currencies as US housing sector weakness reinforced views that US interests rates would remain relatively steady.The ascent continued during the Comex division of the New York Mercantile exchange. Renewed buying interest enabled the precious metal to challenge the $655 level and we remained trading below it for a while. By the midafternoon gold could finally breach that level.

Meantime US economic data showed that manufacturing growth accelerated in June to its fastest in overa year as the economy picked up momentum. The Institute for SupplyManagement’s manufacturing index rose to 56.0 in June from 55.0 in May, surpassing forecasts for no change. The June reading thus reinforced theview that economic growth was recovering after nearly stalling in the first quarter. Gold prices climbed sharply and we reached the peak of $659, but all the gains could not be sustained for long as market participants took profit on the highs. The precious metal was then fairly quiet, limited to$658 on the upside and to $657 on the downside. We believe that the yellow metal will continue getting support from increasing security concerns witha resistance seen at $665. A possibility of a correction cannot be excluded however, as prices rallied relatively fast.

This week the following US economic data will be awaited: Factory orders and pending home sales on Tuesday, ADP payrolls estimate, initial jobless claims and non-manufacturing ISM on Thursday, to finally end the week with the release of non-farm payrolls, unemployment rate and hourly earnings.

Due to Hong Kong holiday silver spent a quiet session. The USD/Yen’s weakness dragged prices lower during the afternoon session and Tocom closed on the downside of the intraday range. In Europe spot rallied gradually and soon extended the overnight high to $12.50. The metal was boosted by the overall firming metals and by copper rising to fresh two-week highs. After a brief fall the white metal turned around following the opening of the NewYork session. We reached the $12.60 levels and the white metal spent the last couple of hours hovering on the upper side of the intraday range tofinally close on a firm note. We believe that silver has the potential to head further north if it breaks above the $12.70 resistance.

MKS Gold & Silver, Daily Report
By Moniah El Shikh

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