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-- Posted Monday, 27 February 2006 | Digg This Article
METALS: OVERNIGHT CHANGES THROUGH 4:00 AM: GOLD -2.60, SILVER -5.30
London Gold Fix $556.10 +$6.35 LME COPPER STKS 108,800 ml tns -425 tons
COMEX GOLD stks 7.523 ml oz unchanged COMEX SILVER stks 128.0 ml oz +596,234 oz OVERNIGHT ACTION: International gold action higher but early US action was weaker. GOLD: Surprisingly Chinese spot gold was higher overnight and that apparently didn't provide the US gold market with much of a lift. In fact, with a steady stream of higher 2006 gold production dialogue filtering through the market recently, we detect a partially negative bias to start the week. Certainly the market saw some support in the Asian action from last Fridays events, ongoing Middle East anxiety and the protests in Indonesia, but with the Dollar showing signs of strength and more talk about higher gold production ahead, we suspect that part of the physical buying interest is being countervailed. Apparently Bema gold produced 256,000 ounces of gold in 2005 and that company expects to produce 381,000 ounces of gold in 2006 and that story joins at least 4 other rising production stories over the last three weeks! We expect that the ongoing anxiety from the Saudi attack is serving to underpin gold prices, but the threat of rising supply and hints of a slight slowing of Chinese copper imports might be just enough negative news to put gold off balance. From a technical perspective, the gold market is moderately overbought, with the February 21st Commitment of Traders with Options report showing a net spec long position of 155,000 contracts. In fact, with a higher Dollar, lower oil prices and a partially overdone short term technical status, the April gold contract might quickly see a chop back to $550. In short, we see the fundamental case in gold tempering, with the concentrated physical buying interest not nearly as consistent as before. In conclusion, the bull market lives on but it appears to be more vulnerable. Fresh longs probably have to risk positions to a close below $537.8. SILVER: The gradual rise in silver stocks continues to be a minor drag on bull mentality but in general the bull camp seems to be able to maintain an overall edge. However, we are detecting slightly bearish developments in the copper market and the silver market has established a positive correlation to that market. In the short term, we can't rule out a slide back to consolidation support just below $9.50 and fresh longs might have to risk positions to at least $9.21. The February 21st Commitment of Traders with Options report showed the Silver Non-Commercial position to be net long 47,868 contracts and the Non-reportable position to be net long 23,177 contracts for a combined spec long of 71,000 contracts and that reading is certainly understated given that the silver market comes into the action this morning, 27 cents above the level where the COT report was measured. In the coming session, we suspect that the bear camp has an edge. METALS TECHNICAL OUTLOOK 2/27/2006 COMEX SILVER (MAR) 02/27/2006: Momentum studies are trending higher from mid-range, which should support a move higher if resistance levels are penetrated. The cross over and close above the 18-day moving average indicates the longer-term trend has turned up. The market's close above the 2nd swing resistance number is a bullish indication. The next upside objective is 993.7. The next area of resistance is around 986.3 and 993.7, while 1st support hits today at 960.4 and below there at 941.7. COMEX GOLD (APR) 02/27/2006: The cross over and close above the 40-day moving average indicates the longer-term trend has turned up. Stochastics are at mid-range but trending higher, which should reinforce a move higher if resistance levels are taken out. The major trend could be turning up with the close back above the 18-day moving average. The market's close above the 2nd swing resistance number is a bullish indication. The next upside target is 567.6. The next area of resistance is around 565.2 and 567.6, while 1st support hits today at 557.2 and below there at 551.6.
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-- Posted Monday, 27 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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