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-- Posted Friday, 27 January 2006 | Digg This Article
METALS: OVERNIGHT CHANGES THROUGH 4:00 AM: GOLD -0.90, SILVER +5.00
London Gold Fix $559.75 -3.00 LME COPPER STOCKS 99,325 metric -1,325 tns COMEX Gold stks 7.318 ml oz +100,701 COMEX SILVER stks 124.1 ml oz +785,831 oz OVERNIGHT ACTION: Chinese gold prices finished lower ahead of a holiday next week, while European gold was trading marginally lower early in its action. GOLD: While silver, platinum and copper managed to make new highs in the action yesterday, the gold market lagged behind and was at times undercut by fund sales. We suspect that the profit taking was partly driven by simple money management purposes and not because of a sudden shift in the fundamental composition of the gold market. It is possible that persistent strength in the gold market is robbing the market of some investors and one might even suggest that a creep higher in the US Dollar is also hindering gold. The Press is carrying a story this morning about the pace of central bank gold sales, which are still apparently underway regardless of the upward track in gold prices. However, the central bank gold sales story might be slightly supportive, as the article suggests that sales appear to be falling short of the pro-rated pace initially allowed under the 5 year gold sales agreement. We suspect the market will still be presented with some unwinding or profit taking again today, especially given the extended Chinese holiday ahead and the potential for a significantly overbought COT report release after the close today. Traders should note that some physical buyers earlier this week did show some propensity to buy on breaks and because of that development and the fact that the trend is strongly entrenched, we suspect that the April gold contract will hold above $557 in the face of more profit taking today. However, seeing April manage a climb above $561.8, could switch the profit taking sellers into fresh buyers. With the second straight monthly rise in Japanese CPI readings, we suspect that inflationary psychology will continue to fuel Japanese gold buying interest and with the silver market actually leading the way higher, we suspect that sellers in gold today will be presented with some resistance. SILVER: The silver market just won't be denied, as another fresh contract high overnight could begin to bring even number $10.00 into play! We continue to think that some traders and investors are rotating to silver, as an alternative to slightly more expensive gold. With the outlook for the US economy mostly improving this week, we can certainly understand the added strength in the industrially impacted precious metals markets of silver and platinum. Near term support in March silver is seen today at $943 but we would caution traders against paying up late in the session for fresh longs, as the COT report might cause a moderate but temporary setback on Monday morning. METALS TECHNICAL OUTLOOK 1/27/2006 COMEX SILVER (MAR) 01/27/2006: A new contract high was made on the rally. Momentum studies are trending higher but have entered overbought levels. The cross over and close above the 18-day moving average is an indication the longer-term trend has turned positive. A positive setup occurred with the close over the 1st swing resistance. The next upside target is 981.1. The next area of resistance is around 972.3 and 981.1, while 1st support hits today at 948.8 and below there at 934.2. COMEX GOLD (APR) 01/27/2006: Momentum studies trending lower from overbought levels is a bearish indicator and would tend to reinforce lower price action. The cross over and close above the 18-day moving average indicates the longer-term trend has turned up. The market tilt is slightly negative with the close under the pivot. The next downside objective is now at 556.8. The next area of resistance is around 568.5 and 570.7, while 1st support hits today at 561.5 and below there at 556.8.
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-- Posted Friday, 27 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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