Gold slipped slowly throughout the Asian session and closed on the lows – MKS

( – Gold was little active overnight, trading in a narrow $1 range. Gold slipped slowly throughout the Asian session and closed on the lows. Selling persisted in Europe with dealer avoiding big moves ahead ofBernanke Testimony and inflation data. However the metal could count on Brent support as well as dollar weakness. Indeed, the dollar stayed near record lows against the euro.

As for crude oil, Brent steadied above $76 abarrel, rebounding from an earlier drop as concerns over supply and speculative buying lent support. Prior to the opening of the Comex divisionof the New York mercantile exchange the precious metal tested the low of$662.75. Then the first economic report came out, showing that cheaper energy helped reduce overall US producer prices in June. Labor Department said that the producer price index, a gauge of prices pad at the farm gate and factory door, declined by 0.2 percent last month, the first decline since January. After stripping out volatile food and energy costs, core prices in June climbed 0.3 percent after gaining 0.2 percent in May. Part of the rise in core prices came from higher prices for new cars and trucks.

Economists had forecast that both overall producer prices and core prices would rise by 0.2 percent. Subsequently the yellow metal drifted $1 higher to trade around the $664 levels. European central bank said today that goldand gold receivables held by euro zone central banks fell by 88 millioneuros to 172.624 billion euros in the week ending July 13. Later in the afternoon US June industrial production report was released. Industrial output rose by a slightly more-than-expected 0.5 percent in June as production for automobiles surged 2.5 percent during the month. Analysts were expecting to see a 0.4 percent rise in June. Gold prices were dragged higher and reached eventually the peak of $667.30 just before the second London fix of $666.50 an ounce. Spot spent the rest of trading hours hovering on both sides of the $666 dollar mark, but a drop in Brent prices pushed prices lower before the close. We believe that gold is likely to remain trading within its current $660-$670 range in the short term.

Silver also spent a quiet Asian session, limited by $13.02 on the upsideand $12.92 on the downside. During the early European hours the metal followed the same pattern as gold and kept losing ground to test the low of$12.89 after its fixing of $12.90. Copper drifted slightly lower, missing the support it had recently had from mine strikes. Indeed, threat of major supply disruption caused by strikes in Chile and Mexico faded. Consequently worries about falling demand for the metal re-emerged. Despite that the white metal rallied up to the $13.05 levels after the opening of the NYsession, but could not hold on to all the gains and retreated back. Spot ended the day just below the $13 psychological level. We believe that inthe short term range trading will prevail with the 200-day moving average of 13.10 providing a first resistance and the 10-day moving average of$12.80 a support.

MKS Gold & Silver, Daily Report
By Moniah El Shikh


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Marion Mueller

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