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-- Posted Wednesday, 25 January 2006 | Digg This Article
METALS: OVERNIGHT CHANGES THROUGH 4:00 AM: GOLD +4.10, SILVER +17.70
London Gold Fix $562.25 +6.60 LME COPPER STOCKS 101,500 metric -1,575 tns COMEX Gold stks 7.169 ml oz Unchanged COMEX SILVER stks 122.8 ml oz +407,054 oz OVERNIGHT ACTION: Sideways trade in Europe apparently gave way to a firmer US opening bid. GOLD: While gold was barely changed in China ahead of a coming week long holiday and the European gold mostly marked time, it would seem like the early US action has managed a quasi upside breakout on the charts. However, in order to confirm the upside breakout and directly extend the overnight rise, the April gold contract might have to maintain above $566 in the first hour of trade today. A possible flap between Freeport and the Indonesian government could eventually complicate production at one of the world's largest mining companies. However, overnight news that a Russian gold producer saw its production of gold rise by 14.5% to stand at 243,000 ounces in 2005 could serve to discourage some buyers. On the other hand, the net change in global gold production thus far has probably only netted a slight overall rise in production, which is surprising when one considers the magnitude of the price run over the last year. Given the bullish overnight technical action, we have to think that the funds will be bullishly pre-disposed to start today and that could mean a new contract high. As opposed to the January 20th spike up run, the gold market would seem to have a more favorable track underway from the stock market, than it had late last week and that could be just enough to send prices to new highs. Given the positive early bias, a trade back below $563.7 this morning could rob the market of the chance to make new highs. SILVER: The silver market certainly outperformed the gold market yesterday and despite strong early gains in gold this morning, the silver market is still outperforming gold with a run to new highs. Apparently all the base metals were lifted yesterday by fund buying and we also think by a bit of good old fashioned physical buying. We suspect that slightly better world equity market action and a generally soft US Dollar is contributing to the strength in silver but we also haven't seen much change in the supply and demand situation, despite the $2.00 rise in prices since last September. In fact, while a Russian mining company reported nearly a 10% rise in 2005 silver production (on an annual output of 18.9 million ounces) the market overnight seems to view the rise in supply as a mostly unimportant development. Near term upside targeting comes in at $9.65 and close-in support isn't found until $9.305 because of the big range up move overnight. METALS TECHNICAL OUTLOOK 1/25/2006 COMEX SILVER (MAR) 01/25/2006: The daily stochastics gave a bullish indicator with a crossover up. Stochastics are at mid-range but trending higher, which should reinforce a move higher if resistance levels are taken out. The market now above the 18-day moving average suggests the longer-term trend has turned up. There could be more upside follow through since the market closed above the 2nd swing resistance. The near-term upside target is at 948.0. The next area of resistance is around 938.6 and 948.0, while 1st support hits today at 907.1 and below there at 885.1. COMEX GOLD (FEB) 01/25/2006: Momentum studies are trending lower from high levels which should accelerate a move lower on a break below the 1st swing support. The major trend could be turning up with the close back above the 18-day moving average. It is a slightly negative indicator that the close was lower than the pivot swing number. The next downside target is 551.2. The next area of resistance is around 561.0 and 562.9, while 1st support hits today at 555.2 and below there at 551.2.
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-- Posted Wednesday, 25 January 2006 | 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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