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-- Posted Tuesday, 7 March 2006 | Digg This Article
METALS: OVERNIGHT CHANGES THROUGH 4:00 AM: GOLD -0.30, SILVER +1.00
London Gold Fix $555.25 -$12.75 LME COPPER STKS 124,050 ml tns +2,875 tns
COMEX GOLD stks 7.517 ml oz Unchanged COMEX SILVER stks 128.4 ml oz +40,711 oz OVERNIGHT ACTION: Follow through selling overnight off Monday declines in the US. GOLD: In addition to a rising Dollar and falling oil prices, gold bulls were confronted with some really disappointing US economic readings. As if the fundamental track weren't negative enough, the market also seems to be confronted with the idea that the US Fed is poised to hike interest rates three times in 2006! In other words, the gold bulls seemed to get the worst of two worlds Monday, by seeing the prospect of rising interest rates and a slight dampening of the inflation look, off the sharp slide in energy prices. However, we don't get the sense that this market is poised to totally come apart, but we wouldn't be surprised to see the April contract fall down toward the $550 level in the coming sessions. It would appear that the majority of the selling pressure is coming from technical considerations, but we suspect that some fundamental longs are becoming discouraged with the lack of upside progression over the last month or by the lack of a definitive down trend in the Dollar, or the lack of supportive US economic readings. We must also note the lack of concentrated physical buying interest that seemed to surface periodically in the wake of weakness in the November through January time frame. In short, the market remains vulnerable to more selling but aggressive traders might consider buying April gold on a slide to $548, using a risk at $536. Those that took our advice to button up long futures positions on Monday morning, with short calls and long puts should continue to hold those instruments for another two sessions. SILVER: While the bull camp seems to be capable of holding May silver up above the initial up trend channel line support of $9.97, the risk to fresh longs remains fairly significant. In fact, in addition to the weakened precious metals psychology, the silver is also seeing some indirect pressure from the ongoing vulnerability in copper and the base metals. The weakness in the base metals seems to hint at softening of industrial demand and that is important to silver, with prices recently rising above $1,020. Therefore, we wouldn't be surprised to see May silver fall down to $9.81 in the coming sessions but really solid support might not be seen until the $9.80 to $9.86 level, as that is where volume spiked significantly on the initial rally to $10.00. As we suggested in gold, silver longs should continue to hold short call and long put coverage against position longs. METALS TECHNICAL OUTLOOK 3/7/2006 COMEX SILVER (MAY) 03/07/2006: Studies are showing positive momentum but are now in overbought territory, so some caution is warranted. The market's short-term trend is positive on the close above the 9-day moving average. The close below the 2nd swing support number puts the market on the defensive. The near-term upside target is at 1044.1. The next area of resistance is around 1021.3 and 1044.1, while 1st support hits today at 983.8 and below there at 969.2. COMEX GOLD (APR) 03/07/2006: The market back below the 40-day moving average suggests the longer-term trend could be turning down. Momentum studies are trending higher but have entered overbought levels. A negative signal for trend short-term was given on a close under the 9-bar moving average. The defensive setup, with the close under the 2nd swing support, could cause some early weakness. The next upside objective is 574.0. The next area of resistance is around 564.3 and 574.0, while 1st support hits today at 549.3 and below there at 543.9.
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 Tuesday, 7 March 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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