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-- Posted Friday, 14 February 2003 | Digg This Article
DAILY US METALS COMMENTARY 2/14/03 METALS:2/14 OVERNIGHT CHANGE to 4:15 AM :GLD-0.30 ,SLV+1.7 ,PLAT+2.40 London Gold Fix $356.25 +$2.00 LME Copper Warehouse sts 831,575 ton -1,300 tns Comex Gold stocks 2.164 ml +7,523 oz COMEX Silver stks 107.7 ml oz -249,182 oz OVERNIGHT ACTION: Not much anticipation of the UN testimony in Asia, gold was steady. GOLD: The gold market returned to bull market status Thursday but it took an extremely visible focus of the US military deployment and rumors that the UN inspectors will slam Iraq with more violations, to rekindle the rally. The Dollar was smashed lower Thursday and that should provide some additional support today for gold in the action today. However, if anything has been learned over the last week, it is that the gold market needs war in order to rally. With open interest correcting from 245,682 contracts to 216,000 contracts, on the $42 correction off the highs, we suspect that gold is in a decent position to rally, even without seeing the COT report readings expected after the close today. Certainly gold is being held back by the fear that a serious terrorist attack could push the world economy back toward a deflationary spiral but in the near term, the war track should be enough to countervail any deflationary selling interest. More gold producers hinted that they would pare back hedge books, in order to benefit from potential price gains. Paring back hedge books should open up the upside in gold especially if the threat of war continues to expand, instead of contract. In fact, Barrick (a mining concern) suggested that their hedge book is a little larger than it should be and that they will look to engineer a less intrusive position. Therefore hedge selling will probably not hold back near term gains. While recent gains might make gold producers less interested in hedging, the $42 correction might have been a wakeup call for some companies, and therefore hedging might be expected to return on a re-visiting of $395. We imagine that the gold will start out the session firm, (into the UN weapons inspection reports) but then gains could slow as some profits are banked ahead of the early closing. However, if UN reports are so shocking that the market expects the Russians to shift to the US position gold could encounter some surprise selling. Near term April support is seen at $354.6 and then again down at $352.5. In order to accelerate the upside swing, the April contract will have to regain the $360 level early and hold it. Our impression is that the US is rushing toward war, regardless of the UN, and that the showmanship of war is designed to give exile a good chance of taking place! SILVER: We suspect that the $4.50 level will be the near term low, with the May contract possibly trading in a $4.50 to $4.70 trading range. However, if gold provides the leadership, silver could easily attempt a return to the $4.80 to $4.90 trading range next week. Like gold, silver also saw its open interest liquidate and that should leave the market in a better technical position to rally, if the circumstances are right. METALS TECHNICAL OUTLOOK 2/14/03 #P-METALS 2/14/03: SILVER (MAY): The market has a slightly positive tilt with the close over the swing pivot. Initial support for silver is at 451.5 and below there at 448.0 with resistance likely at 454.6 and 457.5. A negative signal for trend short-term was given on a close under the 9-bar moving average. Daily stochastics declining into oversold territory suggest the selling may be drying up soon. The next downside objective is 448.0. The market is approaching over sold levels on an RSI reading under 30. GOLD (APR): Support for gold today comes in near 349.78, while resistance is pegged at 363.58. Momentum studies are still bearish, but are now at oversold levels and will tend to support reversal action if it occurs. The next downside target is now at 349.78. The close over the pivot swing is a somewhat positive setup. The close below the 9-day moving average is a negative short-term indicator for trend. The upside daily closing price reversal gives the market a bullish tilt.
-- Posted Friday, 14 February 2003 | Digg This Article
***This report includes information from sources believed to be reliable and accurate as of the date of this publication, but no independent verification has been made and we do not guarantee its accuracy or completeness. Opinions expressed are subject to change without notice. This report should not be construed as a request to engage in any transaction involving the purchase or sale of a futures contract and/or commodity option thereon. The risk of loss in trading futures contracts or commodity options can be substantial, and investors should carefully consider the inherent risks of such an investment in light of their financial condition. Any reproduction or retransmission of this report without the express written consent of Hartfield Management, Inc. is strictly prohibited.
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