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-- Posted Friday, 24 February 2006 | Digg This Article
METALS: OVERNIGHT CHANGES THROUGH 4:00 AM: GOLD +2.60, SILVER +5.80
London Gold Fix $550.75 -$1.75 LME COPPER STKS 109,225 ml tns -175 tons
COMEX GOLD stks 7.523 ml oz unchanged COMEX SILVER stks 127.4 ml oz Unchanged OVERNIGHT ACTION: Chinese spot gold was up overnight but many International players are skeptical. GOLD: While the gold market was able to curb the profit taking selling seen on Thursday, with a slight bounce in the overnight action, the market remains vulnerable. Surprisingly the gold market hasn't seen much in the way of support from the falling Dollar, but most traders are not convinced yet that the Dollar is indeed headed for consistent losses. With China overnight projecting an increase in 2006 gold production, and the gold market recently seeing confirmation of an increase in 2005 gold production (in a couple key producing countries) the supply function has become a partially limiting factor. The Chinese anticipate a 7% increase in 2006 gold production, which would put the output at a significant 240 tons. On the other hand, protests at the Indonesian Grasberg mine have been allowed to continue and that is supposedly going to hinder output at the facility, but the magnitude of that loss is somewhat insignificant to the international gold market. With April gold temporarily sliding below critical support at $549.8 in the overnight trade, we have to warn of a stop loss selling threat in the action today. Over the last two weeks, the incidence of rising supply has been joined by threats of hedge (producer selling) and recently we have not seen as much evidence of dominating "physical and investment" gold buying and that leaves us concerned about the up trend pattern. Therefore, April gold appears to have a series of critical support points on the charts today at $548.9 and $546.6 and failing to hold those levels might allow for an escalation of selling interest. In fact, until concentrated buying surfaces again, we have to leave the edge with the bear camp. SILVER: While the silver market retains a pattern of higher lows on the charts and is possibly the leadership market within the precious metals complex, we are not convinced that silver is poised to rally today. In fact, part of the gains in the gold market overnight were supposed tied to stronger oil prices and the silver market hasn't typically benefited from the geopolitical anxiety theme. In fact, the silver market has been tracking a little closer to the copper market fundamentals recently and with the copper market overnight showing an initial washout, we have to think that silver is a little vulnerable. We must add that with the exception of the aggressive February washout, the silver market has respected a well defined up trend channel for well over 8 months and therefore the bulls are still generally in control. In today's action, the up trend channel support line comes in at $9.21, but closer in support is also seen at $9.45. METALS TECHNICAL OUTLOOK 2/24/2006 COMEX SILVER (MAR) 02/24/2006: Momentum studies are trending higher from mid-range, which should support a move higher if resistance levels are penetrated. The major trend has turned down with the cross over back below the 18-day moving average. The swing indicator gave a moderately negative reading with the close below the 1st support number. The next upside objective is 960.9. The next area of resistance is around 952.7 and 960.9, while 1st support hits today at 940.8 and below there at 936.9. COMEX GOLD (APR) 02/24/2006: The close under the 40-day moving average indicates the longer-term trend could be turning down. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The close below the 18-day moving average is an indication the longer-term trend has turned down. The market's close below the 1st swing support number suggests a moderately negative setup for today. The next upside objective is 558.6. The next area of resistance is around 554.1 and 558.6, while 1st support hits today at 547.7 and below there at 545.8.
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-- Posted Friday, 24 February 2006 | Digg This Article
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