-- Posted Tuesday, 28 May 2013 | | Disqus

STATS

London Gold AM Fix $1,379.00, -$6.25 LME Copper Stocks 622,350 tons -1,525 tons

Gold Stocks 7.993 million ounces +96,083, Silver Stocks 166.726 million ounces +1,387,387

Chinese equity markets were higher overnight with the Shanghai Composite rising up to the highest close since March 6th. European equities were also higher to start today, after upbeat comments from a European official prompted investors to pick up cyclical shares and that in turn put several market measures within close proximity to their recent highs. US stocks were showing positive early action and with the initial rise, the S&P climbed back above the mid point of last week's slide. The US economic report slate is rather active today, with a widely followed private home price survey scheduled for release, a Consumer Confidence report and at least two Fed regional surveys all scheduled for release today. Expectations call for another rise in the 10 city private Home price release and the trade also seems to be expecting another rise in US consumer Confidence readings.

GOLD

The gold market has started out on a weaker footing in the face of a quasi risk-on environment. With adverse Dollar action and noted gains in equities, gold seems to be somewhat out of favor to start the holiday shortened US trading week. However, the big news overnight for gold wasn't macro economic in nature, as the South African government hinted at interjecting itself into the mining sector with a "Rescue Plan". The South African Mines Minister expressed concern of significant upcoming supply and demand interventions in both gold and platinum and therefore the South African government has announced they have developed some plans to keep their mining industry viable. Apparently sagging mining share prices, sagging flat prices of gold and platinum and rising labor and wage demands have already put the South African mining industry on track for a show down ahead and the South African government wants to put measures in place to avert a full blown debacle. Surprisingly the South African Mining Minister included interventions in the demand side of the equation, which is really quite a surprise for some gold market players. Clearly the involvement of the South African government changes the threat of significant layoffs, but the bigger question is how the South African government will finance interventions in the global gold and platinum markets and if the South African government can effectively alter an entrenched down trend in gold and platinum prices. Another issue that might leave the pressure on gold is news that the Indian central bank has continued to restrict bank lending against gold ownership and that in turn has had a dampening influence on Indian gold prices. Comex Gold Stocks were 7.993 million ounces up 96,083. Stocks have declined 11 of the last 20 days. The Commitments of Traders Futures and Options report as of May 21st for Gold showed Non-Commercial traders were net long 61,933 contracts, a decrease of 7,009 contracts. The Commercial traders were net short 67,821 contracts, a decrease of 2,332 contracts. The Non-reportable traders were net long 5,889 contracts, an increase of 4,679 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 67,822 contracts. Certain spec categories in gold have now fallen down to the lowest levels since the sub-prime debacle aftermath! This represents a decrease of 2,330 contracts in the net long position held by these traders.

SILVER

Not surprisingly silver has started off weaker today in the face of adverse currency market action, migration toward equities and perhaps because of a brokerage firm silver price forecast reduction. Since the South African Mining rescue plan seems focused on gold and platinum, the silver market is likely to see only secondary spillover from the political and economic moves ahead. Silver might be drafting some minor support from gains in copper prices early today and perhaps it is garnering some minor support from strength in equities, as that could shore up physical demand hopes for silver down the road. Comex Silver Stocks were 166.726 million ounces up 1,387,387 ounces for another big gain and that could be something that begins to weigh on silver prices, especially if the trade sees that rebuilding of stocks as an entrenched pattern. Silver stocks have declined in 13 of the last 20 days. The Commitments of Traders Futures and Options report as of May 21st for Silver showed Non-Commercial traders were net long 6,794 contracts, a decrease of 1,899 contracts. The Commercial traders were net short 10,404 contracts, a decrease of 1,032 contracts. The Non-reportable traders were net long 3,611 contracts, an increase of 868 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 10,405 contracts. This represents a decrease of 1,031 contracts in the net long position held by these traders. The non-commercial and non-reportable combined positioning has fallen down to the lowest level since the 2001/2002 time frame!

PLATINUM

Platinum prices are showing some initial weakness on the charts and that could suggest that positive macro economic conditions are being seen as a negative to investment potentials in both platinum and gold. It is somewhat surprising to see platinum trading weaker in the wake of news from the South African Mining Minister, who suggested that the South African government was putting together a "rescue plan" for its gold and platinum mining industries. Apparently the South African government is planning "Supply and demand interventions". Interventions on the supply side of the equation are fairly straight forward, but interventions in the demand side of the equation could be a whole different house of cards. Nonetheless, South Africa apparently sees the prospect of some major problems ahead, as gold and platinum prices fall, wage demands from the mining unions rise and share prices of mining concerns weaken. If the first move from the South African government is to prevent supply disruptions, that might support prices, but it could be quite another undertaking for the South African government to effectively prop up both the gold and platinum markets. The Commitments of Traders Futures and Options report as of May 21st for Platinum showed Non-Commercial traders were net long 27,880 contracts, a decrease of 4,854 contracts. The Commercial traders were net short 28,502 contracts, a decrease of 5,113 contracts. The Non-reportable traders were net long 622 contracts, a decrease of 259 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 28,502 contracts. This represents a decrease of 5,113 contracts in the net long position held by these traders. Near term support in July platinum is seen close-in at $1,445.20 and then not until the $1,430.10 level. In order to turn the technical picture around in platinum might require a rise back above $1,464 which is the overnight high.

COPPER

While copper initially saw a fresh lower low, prices have recovered and are attempting to hold in positive ground. However, Asian copper prices were softer overnight, as traders were disappointed in the latest economic news flow from China. While the Chinese suggested that they were on track for a doubling of their growth rate over the long term, the current 7% growth rate, that seems to have become an acceptable growth pace by Chinese leadership, might be a touch too slow for some copper bulls. Another issue that might be undermining copper prices this morning, is news that Chinese April copper output rose by 13.5% over year ago levels especially since that news was accompanied by news that January through April copper output from China also climbed by 11.3% over the year ago quarter. However, copper seems to have caught some lift off the risk on vibe and from the noted gains in a number of global equity markets. The Commitments of Traders Futures and Options report as of May 21st for Copper showed Non-Commercial traders were net short 12,992 contracts, a decrease of 3,989 contracts. The Commercial traders were net long 21,833 contracts, a decrease of 3,968 contracts. The Non-reportable traders were net short 8,840 contracts, an increase of 20 contracts. Non-Commercial and Non-reportable combined traders held a net short position of 21,832 contracts. This represents a decrease of 3,969 contracts in the net short position held by these traders.

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-- Posted Tuesday, 28 May 2013 | Digg This Article | Source: GoldSeek.com

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