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-- Posted Monday, 6 February 2006 | Digg This Article
METALS: OVERNIGHT CHANGES THROUGH 4:00 AM: GOLD +2.10, SILVER +3.50
London Gold Fix $570, +$1 Unch LME COPPER STOCKS 99,755 metric tns, +4025 COMEX Gold stks 7.318 ml oz UNCH COMEX SILVER stks 125.5 ml oz UNCH OVERNIGHT ACTION: Higher overnight on Iran nuclear tensions. GOLD: Mounting tensions over the Iran nuclear standoff underpinned the market overnight and could spur safe haven flows into gold through the course of the week. As expected, the International Atomic Energy Agency on Saturday referred its case regarding Iran's violations to the UN Security Council, and as promised, on Sunday Iran ended snap UN checks of its nuclear sites and announced it was resuming uranium enrichment. This of course has the world on edge, especially regarding potential threats in the near term to oil flows. Crude oil was stronger overnight, which also supports gold this morning. However, the Dollar was also higher and looking strong, which will be a limiting factor for advances in gold prices. Friday's Commitment of Traders with Options report showed that as of January 31st non-commercial traders were net long 140,834 contracts of gold, a decline of 1,003 from the week before. The selling trend, although minor, could be troubling for the bulls. Traders should continue to be long but should not be afraid to sell the March $600 calls against the long futures, as we doubt that the April contract will make it significantly above the $600 strike price before the expiration. Trend line support in April gold now moves up to $571.6, and a key failure isn't seen unless the April contract falls back below $569. SILVER: Silver may be losing its leadership position in the metals markets, evidenced by its failure to make a new high with gold on last week's run-up. This would make sense if Iran/flight to quality becomes the issue of the moment. However, it does not mean that silver has lost its momentum. Still, Friday's Commitment of Traders with Options data could be troubling, as it indicated a selling trend developing on the part of the funds. The report showed that as of January 31st non-commercial traders were net long 53,505 contracts of silver, down 2,861 from the week before. If the funds become concerned that the market is overbought, the market could be in for a correction. We continue to think that longs should sell March 1025 or 1050 calls against their position and might also consider using some of that premium to purchase March 975 puts. The options will allow more upside benefits, but will mostly offset moderate to severe corrections. The trend remains up but one can't rule out periodic corrective action of a 7 to 15 cent magnitude. METALS TECHNICAL OUTLOOK 2/6/2006 COMEX SILVER (MAR) 02/06/2006: Momentum studies are trending higher but have entered overbought levels. The major trend could be turning up with the close back above the 18-day moving average. The swing indicator gave a moderately negative reading with the close below the 1st support number. The near-term upside target is at 996.5. The next area of resistance is around 985.5 and 996.5, while 1st support hits today at 966.5 and below there at 958.5. COMEX GOLD (APR) 02/06/2006: The daily stochastics have crossed over down which is a bearish indication. Momentum studies are trending lower from high levels which should accelerate a move lower on a break below the 1st swing support. The market now above the 18-day moving average suggests the longer-term trend has turned up. The close below the 1st swing support could weigh on the market. The next downside target is 563.6. The next area of resistance is around 576.0 and 581.5, while 1st support hits today at 567.1 and below there at 563.6.
To those of you who have emailed or commented on the daily commentary regarding price manipulation: our daily comments are strictly to provide our customers and subscribers with news, which may influence the markets marginally on a day-to-day basis. This is not the forum to address price manipulation.
There are multitudes of ways in which one can participate in a bullish or bearish perspective in the metals complex. Mining shares as well as purchasing bullion are just a few. Another investment of choice is through futures and/ or options on futures contracts. If you have traded, then you will be able to appreciate the brokerage service that Nell Sloane and Group can offer. If you have not, and wish to learn more about it, please feel free to contact her staff so that they can forward you some educational literature for your review. Please contact Nell Sloane or a member of her team at 800 238 2610.
-- Posted Monday, 6 February 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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