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-- Posted Tuesday, 28 February 2006 | Digg This Article
METALS: OVERNIGHT CHANGES THROUGH 4:00 AM: GOLD +0.80, SILVER +5.50
London Gold Fix $556.40 +$0.30 LME COPPER STKS 108,900 ml tns +100 tons
COMEX GOLD stks 7.524 ml oz +1,254 oz COMEX SILVER stks 127.9 ml oz -97,213 oz OVERNIGHT ACTION: Chinese spot gold lower but early US action showed minor gains. GOLD: While the gold market has managed to bounce slightly off some favorable currency related action in Japan, we still get the sense that the market is off balance. With news that Newmont Mining saw a decline in its 4th quarter profitability and Russia indicating yesterday they might be able to increase gold production by 50% over the coming 9 years, we can understand some of the positive investment buzz dying down in the gold market. It does seem like the gold market retains a correlation with the energy market and with the Dollar recently showing strength there seems to be a number of minor outside negatives nagging the gold bulls. We also have to think that the significant slide in copper prices serves to undermine gold sentiment, especially when the slide in copper was prompted by news of a significant decline in Chinese January copper imports. In other words, the gold market was probably hindered by talk that overall Chinese metal demand might be leveling out. In our opinion, the path of least resistance in gold is still pointing down, with the market potentially vulnerable to an $8 break in prices in the event that key levels are violated on the charts. While the April gold contract seems to have forged some close-in support around the $554.8 level, we can't rule out a slide to $549.8. Trend line support in the April gold comes in at $546, with resistance seen up at $561.7. SILVER: While the charts in the silver market remains positive, we suspect that the weakness in copper prices yesterday is an issue that undermines sentiment in silver. However, considering the sloppy action in gold and the sharp slide in copper on Monday, one has to concede that silver has held together fairly impressively. In other words, it would still seem like silver maintains a leadership capacity in the metals complex and that might stem from the fact that many traders view silver prices as undervalued versus gold prices. Critical trend line support in May silver comes in at $960.8, with the top of the current up trend channel not seen until the $994.7 level. Fortunately overnight the silver market got away from the recent pattern of daily stock increases with a minor decrease of 97,000 ounces. A slightly positive bias is seen in silver, despite the lack of a definitive bull track in the gold market. METALS TECHNICAL OUTLOOK 2/28/2006 COMEX SILVER (MAR) 02/28/2006: Momentum studies are rising from mid-range, which could accelerate a move higher if resistance levels are penetrated. The market now above the 18-day moving average suggests the longer-term trend has turned up. The market's close below the 1st swing support number suggests a moderately negative setup for today. The next upside target is 972.4. The next area of resistance is around 966.7 and 972.4, while 1st support hits today at 953.8 and below there at 946.4. COMEX GOLD (APR) 02/28/2006: Momentum studies are trending higher from mid-range, which should support a move higher if resistance levels are penetrated. The close below the 18-day moving average is an indication the longer-term trend has turned down. It is a slightly negative indicator that the close was lower than the pivot swing number. The near-term upside objective is at 560.3. The next area of resistance is around 558.7 and 560.3, while 1st support hits today at 555.2 and below there at 553.2.
-- Posted Tuesday, 28 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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