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-- Posted Wednesday, 1 February 2006 | Digg This Article
METALS: OVERNIGHT CHANGES THROUGH 4:00 AM: GOLD -4.50, SILVER -15.50
London Gold Fix $567.20 -2.60 LME COPPER STOCKS 96,000 metric -1,600 tns COMEX Gold stks 7.320 ml oz +2,510 oz COMEX SILVER stks 124.7 ml oz Unchanged OVERNIGHT ACTION: Profit taking action seen in a rather volatile trading session overnight. GOLD: The gold market is expected to see a wider trading range today as cross currents buffet the market. While some might discount the Fed dialogue as the primary cause for the weakness in gold today, due to the delayed reaction of the setback, we have to think that the somewhat hawkish stance of the Fed has inspired some of the profit taking being seen in the overnight action. In a supportive development overnight, Russia indicated that they would see a 1.2% decline in 2006 gold production and that reiterates the potential for ongoing tightening of the gold supply and demand condition. In fact, with the trade talking up the potential additions to implied demand off the ETF and Index fund theme, any decline in physical supply would seem to exponentiate the tightening. We suspect the combination of currency action and the recent lofty price of gold contributed to the overnight light profit taking action in the Japanese gold market but according to Press reports, there would seem to be plenty of optimism in the gold market overnight despite the softer tone. We have to think that the more aggressive political stance by Russia and China toward the Iranian situation will serve to underpin prices well above the $560 level in the April contract. However, given an extension in the minor Dollar gains overnight and a failure to hold a critical pivot point of $570 this morning could result in a more significant profit taking slide toward the $560 aforementioned support level. SILVER: Even the silver market is showing a corrective bias this morning and with the periodic leadership being shown by silver over the last two weeks, we suspect a temporary slide in prices is in order. Near term downside targeting in March silver is seen at $9.605 but the market might find initial support at the $9.665 level. If the silver market is really the current leader in the precious metals complex, it should show the first sign of bottoming and with the investment theme seemingly firmly entrenched, one has to be on the lookout for a quick rejection of any concentrated selling interest. METALS TECHNICAL OUTLOOK 2/1/2006 COMEX SILVER (MAR) 02/01/2006: The market made a new contract high on the rally. Studies are showing positive momentum but are now in overbought territory, so some caution is warranted. The major trend could be turning up with the close back above the 18-day moving average. The market setup is supportive for early gains with the close over the 1st swing resistance. The next upside target is 1000.1. The market is becoming somewhat overbought now that the RSI is over 70. The next area of resistance is around 995.3 and 1000.1, while 1st support hits today at 981.8 and below there at 973.2. COMEX GOLD (APR) 02/01/2006: The rally brought the market to a new contract high. Rising stochastics at overbought levels warrant some caution for bulls. The market now above the 18-day moving average suggests the longer-term trend has turned up. Market positioning is positive with the close over the 1st swing resistance. The near-term upside target is at 581.8. The market is approaching overbought levels with an RSI over 70. The next area of resistance is around 579.1 and 581.8, while 1st support hits today at 571.9 and below there at 567.3.
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-- Posted Wednesday, 1 February 2006 | Digg This Article
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