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-- Posted Friday, 17 February 2006 | Digg This Article
METALS: OVERNIGHT CHANGES THROUGH 4:00 AM: GOLD -0.80, SILVER +0.00
London Gold Fix $545.45 +$1.15 LME COPPER STKS 105,825 ml tns -750 tons
COMEX GOLD stks 7.528 ml oz +40,866 oz COMEX SILVER stks 125.6 ml oz Unchanged OVERNIGHT ACTION: Reports of Bank buying in China help to solidify Thursday gains. GOLD: While the gold market managed an upside breakout overnight and that accentuates the attempt to countervail the recent corrective action, the Gold market remains somewhat under a cloud of suspicion. Both the Chinese and Japanese gold markets were up slightly overnight, but those markets might have forged the gains in a follow up reaction to the US Thursday action. We might also add that Press reports overnight acknowledged the price gains overnight in foreign markets, but the trade in those markets also suggested that gold remained vulnerable. We do think that the positive macro economic developments and the favorable equity market action in the US this week is providing some support to gold. Some traders suggest that the persistent weakness in energy prices has contributed to the vulnerability in the metals, as that action reduces the inflationary outlook. However, in the long run, the washout in energy prices should help the economy and that in turn should foster and extend global growth, which many think facilitates physical gold buying. We think that ongoing global growth, which creates increased international settlements and growth in current account surpluses (in China) will prompt Central banks to buy or increase gold holdings. With the Chinese gold market talking about Bank buying and the US Press detecting bullion buying in Europe yesterday, the market certainly comes into the opening this morning in the best position since February 10th. Unfortunately we doubt that the metals will be helped by the US PPI report this morning! Initial resistance is seen this morning at $550.5, with critical support at $541.8 and again at $538.6. The market might be a in a little better posture today, but we can't argue against a slide back to consolidation support of $538.6 in the wake of the numbers this morning. SILVER: Like gold, silver has also managed an upside breakout or upside probe overnight, but also like gold, silver has failed to hold all of the gains into the normal US opening. Silver should be boosted by the slight macro economic upgrade/higher equity market action this week and silver might also be boosted by the copper markets ability to reject a steep sell off yesterday. It would seem like the market is capable of recovering further, but the silver market might have to overcome the tendency to slide back into the consolidation range of $9.38 to $9.08, that was formed by the action early this week. With gold re-gathering itself a little and the outlook toward the base metals also getting itself back together, it is becoming more likely that the big corrective action has run its course. We are emboldened by the performance in the equity markets and by news that steel and dry bulk shipping rates started to firm this week, as that could help the silver get back into an upward pattern. Critical support in March silver today is $9.315 and a fresh upside breakout comes in at $9.47. METALS TECHNICAL OUTLOOK 2/17/2006 COMEX SILVER (MAR) 02/17/2006: Negative momentum studies in the neutral zone will tend to reinforce lower price action. The close below the 18-day moving average is an indication the longer-term trend has turned down. The close over the pivot swing is a somewhat positive setup. The next downside objective is now at 902.5. The next area of resistance is around 951.0 and 958.5, while 1st support hits today at 923.1 and below there at 902.5. COMEX GOLD (APR) 02/17/2006: The cross over and close above the 40-day moving average is an indication the longer-term trend has turned positive. Daily stochastics declining into oversold territory suggest the selling may be drying up soon. The close below the 18-day moving average is an indication the longer-term trend has turned down. With the close over the 1st swing resistance number, the market is in a moderately positive position. The next downside target is 536.3. The next area of resistance is around 553.9 and 556.6, while 1st support hits today at 543.7 and below there at 536.3.
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.
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-- Posted Friday, 17 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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