The market firmed throughout the Tocom session to close near the highs – MKS

(OroyFinanzas.com) – The market firmed throughout the Tocom session overnight, short covering and buying interest enabling it to close near the highs. During the early European hours gold continued its ascent, helped by a weaker dollar and firm oil prices.

Indeed, Brent hit a new-10-month high surging above $74 a barrel, supported by expectations of strong gasoline demand in the world’stop consumer. However market participants were reluctant to take larger positions ahead of the monetary policy meetings by the Bank of England and the European Central Bank. When the Bank of England announced its decision to raise interest rates by a quarter percentage point to a six-year high of5.75 percent, the fifth increase since last august, sterling popped backabove $2.02. The BOE thus highlighted persisting risks to inflation.Regarding European Central Bank rates, the ECB held its benchmark interest rate as expected at 4.0 percent, leaving markets awaiting guidance on the timing of the bank’s next move. Rates were already at a near six-year highafter June’s rise of a quarter percentage point. ECB officials have repeatedly said they expect inflation to rise by the end of the year due to high oil prices and shrinking spare capacity in the economy, paving the way for a rise in interest rates soon. As a result the euro hit a record high versus the dollar.

Somehow the market seemed to have ignored theses announcements and did not strongly react. US data came out after the opening of the Comex division of the NY mercantile exchange and showed that US jobless claims rose 2,000. The labor department said that first-time applications for state unemployment insurance benefits rose to 318,000 in the week ended June 30 from an upwardly revised 316,000 the prior week. Analysts had forecast a rise in claims to 315,000. Subsequently gold began to slip. By the mid afternoon US June ISM services index came out. TheInstitute for Supply Management said its services index rose to a higher than expected 60.7 in June from 59.7 in May. A number above 50 indicates growth in the sector. Following the second London fixing of $651 where selling became apparent weekly US government oil data was released. The report showed that US crude oil and refined products stocks increased as imports remained strong and US refineries increased output. US gasoline production rose 60,000 barrels per day to 9.402 million bpd, while US crude oil stocks rose 3.1 million barrels to 654 million barrels despite an increase in refinery utilization which rose to 90 percent of capacity from89.4 percent a week earlier. US gasoline stocks were also higher, rising 1.8 million barrels to 204.4 million barrels. Following the bearish data for crude gold plunged lower. Stops were hit below $650 and follow-through selling took us eventually to the low of $646.30. At the end of the day short covering pushed spot slightly higher, but it could not regain the$650 key level. We believe that if the $650 level is not reachieved further downside is possible.

Silver was range bounded in Asia and overseas selling around $12.68 capped the upside. The white metal spent a relatively quiet morning inEurope, fixing at $12.60 an ounce. During the Comex session silver followed the same pattern as gold and plunged down to $12.42 before recovering someof the intraday losses by the late afternoon. For the moment, the major support lies at $12.40 while $12.70 provides a resistance.

MKS Gold & Silver, Daily Report
By Moniah El Shikh

© OroyFinanzas.com

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Marion Mueller

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