(OroyFinanzas.com) – Physical buying and short covering below $657 supported gold overnight, while offers around $658 capped the market. In Europe the very narrow range above $656 prevailed.

Gold was steady, getting support from security worries and from a weaker dollar. Indeed, the dollar hit a 26-yearlow versus sterling and hovered near a record low against the euro as investors were reluctant to buy the greenback ahead of the US Independence Day holiday. Moreover, some analysts were thinking that bullion prices would remain supported by safe-heaven buying on fears of an al-Qaeda attack on the US on Wednesday, following car bomb attacks in London and Glasgow in recent days. Subsequently we fixed at $657.25 on the first London fix and remained sidelined until the opening of the Comex Division of the New York mercantile exchange. The beginning of the afternoon session was very quiet. Then the metal came progressively under selling pressure and dipped below the $655 level. Brent retreated towards $72 a barrel after hitting a10-month high the previous session. After a while US data was released, showing that new orders at US factories fell a smaller-than-expected 0.5 percent in May, logging the first decline in four months.

The Commerce Department said that transportation equipment orders, the largest categoryof factory orders, fell 6.9 percent in May. This is why, excluding transportation, factory orders rose 0.7 percent, helped by a 4.2 percent rise in computer and electronic product orders. Regarding US May pending home sales, they unexpectedly fell to their lowest level in more than 5-1/2years. The 3.5 percent fall was far above the expectations, showing that housing sector continues to be weak. Following these mixed figures spot slipped further down. Selling interest was also seen during the second London fix. Indeed, prices started trying at $655, but in the absence of buyers we eventually fixed 75 cents below the starting point. Gold spent the last couple of hours trading between $652 and $654 and settled in this area. We believe that the yellow metal will continue getting support from increasing security concerns with a resistance seen at $660-$665 levels. Apossibility of a correction cannot be excluded however if the $650 fails to hold.

Silver lost some ground after yesterday’s close. Spot tested the lows in the morning session but then a stronger USD/YEN took prices higher in the afternoon. As soon as London opened silver challenged the $12.70 keylevel, but eased afterwards to fix at $12.60, up 13 cents from the previous one. Copper prices rose as the dollar tumbled and the market worried about supply disruptions. Consequently, the white metal was able during the Comex hours to sustain the $12.50 until the mid afternoon when gold plunged. Silver followed the yellow metal in its downside and revisited the $12.40levels before bouncing back. We believe that a breach of the important12.70 would accelerate the upward movement, but trading is likely to besubdued ahead of the holiday. Please note that New York market will be closed on Wednesday dueto the Independence day.

MKS Gold & Silver, Daily Report
By Moniah El Shikh

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