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-- Posted Friday, 10 March 2006 | Digg This Article
METALS: OVERNIGHT CHANGES THROUGH 4:00 AM: GOLD -0.40, SILVER -3.00
London Gold Fix $545.40 -$1.85 LME COPPER STKS 132,950 ml tns +3,350 tns
COMEX GOLD stks 7.549 ml oz Unchanged COMEX SILVER stks 127.2 ml oz -587,286 oz OVERNIGHT ACTION: Chinese gold lacked direction, while European gold opened soft. GOLD: While sentiment was certainly improved by the coordinated rise in prices yesterday, we still get the sense that the bear camp is lurking. In fact, with some Wall Street firms downgrading key gold shares as overvalued and other Press outlets trumpeting a possible end to the commodities boom, it is clear that the vulnerable environment remains in place. While US gold imports in January jumped by 61% over the prior month and were also up 103% versus year ago levels, we still think that the gold market needs a favorable US payroll reading this morning, just to foster the hopes for strong ongoing physical gold demand and to a degree just to keep the inflationary expectation alive. We continue to see buy-outs and merger activity within the gold mining sector and that should be seen as a sign that the industry doesn't see current valuations as overly expensive. While we suspect that the $540 level in the April gold contract will eventually hold up as support, one has to expect ongoing choppy action in the coming sessions. In order to fully throw off the liquidative tilt, the payroll report this morning has to be solid and energy prices have to rekindle inflationary psychology. In conclusion, traders should remain long but should have short side protection. In fact, even in the face of a strong US payroll reading, it is possible that a rising Dollar will serve to discourage gold buyers, especially because the Dollar is already poised at an upside breakout point on the charts this morning. SILVER: Like gold, we see silver slowly replacing the overt bearish early March sentiment, with a more balanced view. However, the market is not out of the woods yet, but seeing copper spring back to life yesterday should help silver firm up support on the charts. Critical support on the charts is seen today at $9.744 basis the May contract but as we suggested yesterday, those that intend to stay long should carry some options protection. Seeing the May silver climb back above $10.09 again today, might actually spark some week ending technical stop loss buying, but in order to see that type of action the market has to regain respect for the pace of the US economy off the monthly payroll report this morning. Those long silver might watch May copper price action closely today, as a slide below 216.00 could be a sign of a resumption of the recent selling wave in the industrial metals markets. METALS TECHNICAL OUTLOOK 3/10/2006 COMEX SILVER (MAY) 03/10/2006: Momentum studies are trending lower from high levels which should accelerate a move lower on a break below the 1st swing support. A positive signal for trend short-term was given on a close over the 9-bar moving average. Follow through buying looks likely if the market can hold yesterday's gap on the day session chart. With the close over the 1st swing resistance number, the market is in a moderately positive position. The next downside target is now at 979.3. The next area of resistance is around 1006.5 and 1017.3, while 1st support hits today at 987.5 and below there at 979.3. COMEX GOLD (APR) 03/10/2006: Momentum studies trending lower at mid-range should accelerate a move lower if support levels are taken out. The market's short-term trend is negative as the close remains below the 9-day moving average. With the close higher than the pivot swing number, the market is in a slightly bullish posture. The next downside target is 541.6. The next area of resistance is around 550.0 and 554.0, while 1st support hits today at 543.9 and below there at 541.6.
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-- Posted Friday, 10 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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