London Gold AM Fix $1,353.75, -$23.00 LMECopper Stocks 628,025 tons -1,925 tons.

Gold Stocks7.968 million ounces +766, Silver Stocks 164.020 million ounces -855,953

Chineseequity markets were higher overnight off more gains in cyclical shares and fromthe Chinese property sector. European shares were higher off carryoversentiment from the USon Friday but also because of ideas that the world economy is showing someimprovement. The USmarket was choppy to start, as the talk of an overbought condition hasseemingly resulted in some pause by investors. The USreport schedule today is somewhat thin, with a Chicago Fed National ActivityIndex release, and the Fed's Evans will give a speech in Chicago in the afternoon.

GOLD

Weakness ingold prices was seen overnight in Asia, with gold in India falling to a 1 month low.With the slide overnight and the declines forged at the end of last week, theCommitments of Traders positioning in gold probably overstates the longposition. The COT Futures and Options report as of May 14th for showedNon-Commercial traders were net long 68,942 contracts, a decrease of 9,929.Commercial traders were net short 70,153 contracts, a decrease of 7,031.Nonreportable traders were net long 1,210 contracts, an increase of 2,897contracts, and this represents a change from a net short to a net longposition. Non-Commercial and nonreportable traders combined held a net longposition of 70,152 contracts, a decrease of 7,032. Since the last Tuesday whenCOT report was measured, June gold prices to the overnight low have fallen anextra $88 an ounce! Gold derivative holdings at the end of last week showedanother decline and were seen at their lowest level since March 2009.Surprisingly, gold doesn't seem to be garnering any lift from supportivecurrency market action and gold. It also doesn't seem to be drafting anysupport from initial weakness in US equities. Gold also didn't seem findsupport from news that the South African Mine Workers Union was asking forsignificant wage increases. With that stance causing South African miningshares to fall, it would appear that the prospect for strikes will be on therise. With June gold to the lows overnight sitting $466 an ounce below theOctober 2012 highs, gold mining companies aren't exactly in a position to offerup wage increases. However, in the short term the gold market might have to seeproduction derailed to offset the current wave of investment liquidation. Goldmay have even drafted some support off news reports overnight of strong Indiandemand and Indian equities lifting the Indian currency but apparently notenough to send gold prices higher overnight. Comex Gold Stocks were 7.968million ounces up 766 ounces. Gold stocks have declined in 12 of the last 20days.

SILVER

Silver sawsome aggressive liquidation action overnight, with the July contract fallingdown to its lowest level since September of 2010! In addition to knock-onselling from gold, silver was reportedly under pressure from technicallyinspired selling as the market approached and failed to hold the April spikelow. Another element that might be undermining silver is ongoing interest inequities, which in turn might have been behind the decline in silver derivativeholdings at the end of last week. One silver derivative instrument on Fridaysaw its holdings fall down to its lowest level since January 15th. TheCommitments of Traders Futures and Options report as of May 14th showedNon-Commercial traders were net long 8,693 contracts, a decrease of 3,829.Commercial traders were net short 11,436 contracts, a decrease of 2,063.Non-reportable traders were net long 2,743 contracts, an increase of 1,765contracts. Non-Commercial and Non-reportable traders combined held a net longposition of 11,436 contracts, a decrease of 2,064 contracts. With July silverfrom the COT position mark off date down another $3.12 an ounce to thismorning's low, the COT long positioning readings are probably overstated.However, silver in modern trading has only seen two instances where the Non-reportableand Non-commercial net long positioning has fallen below 10,000 contracts, andthat was in mid 1997 and again in 2001! Comex Silver Stocks were 164.020million ounces down 855,953 ounces. Silver stocks have declined in 14 of thelast 20 days.

PLATINUM

Like the restof the precious metals markets, platinum is under pressure to start the newtrading week, with a large portion of that coming from gold and silver priceaction. As in gold, platinum is discounting news of significant wage increase intentionsfrom South African mining unions. The market is also discounting somewhatfavorable currency market action. Impala officials have already lobbed a volleyback toward the unions by suggesting that mining companies cannot offer wageincreases! The Commitments of Traders Futures and Options report as of May 14thshowed Non-Commercial traders were net long 32,734 contracts, an increase of2,093. The Commercial traders were net short 33,615 contracts, an increase of2,032 contracts. The Non-reportable traders were net long 881 contracts, adecrease of 60 contracts. Non-Commercial and Non-reportable combined tradersheld a net long position of 33,615 contracts. This represents an increase of2,033 contracts in the net long position held by these traders. With platinumprices to the overnight lows sitting roughly $70 an ounce below the level wherethe COT report was measured, the spec long positioning figures are probablyoverstated. From a short term perspective, July platinum was probably shortterm oversold into the overnight low, and that might leave support today at$1,442 in the July contract.

COPPER

The coppermarket held up relatively well overnight, especially when one considers thebeat-down seen in the rest of the metals complex. Apparently Asian copperplayers think that the Fed is poised to remove QE, but copper isn't in asvulnerable of a position technically as gold and silver. Those markets continueto hold net long positions in the non-reportable and non-commercial categories,while copper doesnt. The Commitments of Traders Futures and Options report asof May 14th for Copper showed Non-Commercial traders were net short 16,981contracts, a decrease of 1,483 contracts. The Commercial traders were net long25,801 contracts, a decrease of 1,907 contracts. The Non-reportable traderswere net short 8,820 contracts, a decrease of 424 contracts. Non-Commercial andNon-reportable combined traders held a net short position of 25,801 contracts.This represents a decrease of 1,907 contracts in the net short position held bythese traders. Copper might have drafted some fleeting support from favorableproperty sector action in Chinaovernight, but some traders think that ongoing property price strength in Chinawill virtually eliminate fresh easing hopes from the PBOC. The copper marketmight see some reaction to the Chicago Fed National Activity index release andto a Fed speech that is scheduled for the afternoon trade.

Insightful. Unbiased. Strategic.

Futures MarketResearch for Traders | Producers & End Users |Brokers

MaySpecial:  Subscribe for 2 Months and Receive a Free2013 Trading Guide. Go to: http://g.oogl/oHK4a

-- Posted Monday, 20 May 2013 | Digg This Article