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-- Posted Monday, 5 May 2003 | Digg This Article
June Gold: Close = $342.6 +$1.3
To start the new week gold traders kept prices on the black side of even throughout the session. Gold bulls were inclined to posture themselves on the long side today, as another slide in the US dollar index prompted the somewhat bullish action. Financials found equilibrium slightly above unchanged, equities were also indecisive, yet June Crude jumped over 80 points during mid-session.
Layoff announcements reportedly increased 70% from last month, with weakness in public sector employment leading the way. Keep in mind that many states are facing budget shortfalls for one reason or another…too loose with their checkbooks, poor management, decreased tax revenues, etc., and trimming the edges of the workforce is a step towards cutting costs. Last week manufacturing, productivity and employment numbers were somewhat discouraging, yet equities found the scenario as being half full as opposed to half empty. However, consumers seem afraid to spend, stock investors are still licking their wounds, businesses remain hesitant to grow and hire and the two-year downtrend in the dollar is persisting. Until those scenarios reverse, gold should trade with a bullish tone. Take note that the Fed is meeting tomorrow to discuss the economic affairs of the nation and possibly adjust interest rates. It’s not likely they’ll lower rates this time around, but one can never be sure of what they’ll do. If they did lower rates, that could be perceived negatively, with many then perhaps assuming that the economy was in such dire straights that immediate rescue was needed. And, from the perspective of simple mathematics, if rates are lowered that infers there’s even less room remaining for rates to be used as a stimulus tool in the future. If the economic landscape remains stagnant to bearish, gold could find the legs to break $400. However, if gold is to run to the moon and beyond, the monetary/financial/equity and geopolitical environment will first have to spiral out of control into a dark abyss. Prices are above the 50-day moving average and technicals are headed higher, although they are approaching overbought levels. Look for a stab higher and then for the market to correct a bit and repair the indicator…in other words…for lower prices to attract more buyers. If long with TradeScope, be sure to follow along and keep stops tight. We’re still looking to 347 as a near-term target, with support now 337.9. Remember, with futures and options one can be short or long, feel free to contact me to discuss trading strategies. Each contract/option = 100 ounces, a $1 move in a futures contract = $100.
To open an account and receive trading recommendations on gold futures or options contracts (also stock indices, energies, currencies, etc.), or to use PaperTrader Online contact me at erik@altavest.com. Visit www.altavest.com to request a Free Starter Kit. Keep in mind that there is risk of loss in all trading.
July Silver: Close = 481.5, +1.8-cents
There was a valiant attempt at taking out the high from Friday, but prices came up just a shade short. Nonetheless, silver bulls were the beneficiary of a weaker US dollar market, as well as follow through technical strength. Silver is making a nice run up on the coattails of gold, look to the low 480’s as congestion and resistance, with 462 the next support level. However, do take note that there is bearish divergence on some technicals…they are not following prices higher, and IMHO, odds favor a correction this week. Each contract/option = 5,000 ounces, a 1-cent move in a futures contract = $50. Contact me anytime to discuss strategies to fit your needs.
To open an account and receive trading recommendations on gold futures or options contracts (also stock indices, energies, currencies, etc.), or to use PaperTrader Online contact me at erik@altavest.com. Visit www.altavest.com to request a Free Starter Kit. Keep in mind that there is risk of loss in all trading.
-- Posted Monday, 5 May 2003 | Digg This Article
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