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-- Posted Thursday, 30 March 2006 | Digg This Article
METALS: OVERNIGHT CHANGES THROUGH 4:00 AM: GOLD +6.90, SILVER +38.00
London Gold Fix $579.50 +$15.75 LME COPPER STKS 121,300 ml tns -75 tns
GOLD stks 7.526 ml oz Unchanged COMEX SILVER stks 124.6 ml oz -598,157 oz OVERNIGHT ACTION: Chinese prices soared in a catch up move overnight, while European gold reached a 25 year high. GOLD: OUTSIDE MARKET DEVELOPMENTS: With the Dollar moderately lower for a second day in a row, the currency impact has turned back into a more positive impact for gold. In fact, with the Dollar unable to find sustained support in the wake of a rather hawkish Fed outcome, it is possible that the currency impact on gold is set to remain positive. Other favorable developments for the gold market include a sharp upward run in the US equity market and renewed strength in energy prices. For most of last week, the outside market influences were negative to gold but now that situation has been reversed.
INTERNAL MARKET DEVELOPMENTS: With the Press talking up the flight to quality, store of value and inflation hedge properties of gold and all of the precious metals, we suspect that buying interest from the funds will continue to flow to gold. In fact, interest by the funds seems to be rising rather aggressively, with the Press suggesting that the end of quarter timing is exaggerating the inflow of money. While the spec and fund long position is rising and volume has soared over the last four trading sessions, it is unlikely that the COT positioning has reached the old record level of 227,566 contracts. The prior combined spec and fund long positioning was 138,507 contracts and while the gains since that report are sure to raise the magnitude of the long position, the market probably isn't historically bought out yet! With June gold managing a fresh contract high this morning, the stock market fanning the potential for physical demand and the funds apparently facilitating the upward motion, we expect prices to continue to rise. In fact, given the sharp upward extension in silver prices this morning and all the Press Buzz about Funds rushing in ahead of the end of quarter, the market might run until it becomes moderately overbought from a short term perspective. In fact, given the Dollar slide and the fact that most outside markets are contributing to the bullish track, we would not be surprised to see June gold rise to $594. Critical support in the June gold today is $579.9 and close-in resistance is seen up at the high of $585.7. SILVER: OUTSIDE MARKET DEVELOPMENTS: With the copper markets and some of the base metals seeing a positive flow of buying interest lately and the US stock market hinting at even better economic conditions ahead, the overall environment for metals is supportive. Seeing the copper market rise sharply into new high ground this week, means that silver is getting support from both gold and copper or in other words from the precious and industrial metals aspect. In short, both the financial and commodity components are providing silver with investment flow.
INTERNAL MARKET DEVELOPMENTS: Apparently the silver market is seeing a significant amount of technical buying interest off the persistent pattern of new highs. In fact, the Press is documenting the influx of fund buying money with a very high frequency and that seems to be creating a self fulfilling push upward. The silver market still seems to be getting follow through buying off the bullish metals industry commentary made by Penoles at a Conference early in the week. In short, the silver market is seeing internal and external factors favoring the bull camp. While the silver market might be poised to get a little ahead of itself off the aggressive influx of fund buying and the resulting small spec influx (off the bullish Press coverage) we can't argue against a moderate upside extension. In fact, with equity prices positive, copper prices positive, inflation fears back in place and the trade mostly convinced that global growth is expected to continue, we can't argue against a pulse up to $11.70 to $11.80. However, it is possible that silver has already seen its small spec and fund positioning reach the 97,355 contract record that was posted back in March of 2004. On the other hand, seeing open interest rise to a new record level would lead one to expect a new record in the spec and fund long positioning. METALS TECHNICAL OUTLOOK 3/30/2006 COMEX SILVER (MAY) 03/30/2006: The market made a new contract high on the rally. Momentum studies are trending higher but have entered overbought levels. The market's short-term trend is positive on the close above the 9-day moving average. The market has a bullish tilt coming into today's trade with the close above the 2nd swing resistance. The near-term upside target is at 1136.3. With a reading over 70, the 9-day RSI is approaching overbought levels. The next area of resistance is around 1127.5 and 1136.3, while 1st support hits today at 1095.5 and below there at 1072.3. COMEX GOLD (APR) 03/30/2006: Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The market's close above the 9-day moving average suggests the short-term trend remains positive. The outside day up is somewhat positive. Since the close was above the 2nd swing resistance number, the market's posture is bullish and could see more upside follow-through early in the session. The next upside target is 583.2. With a reading over 70, the 9-day RSI is approaching overbought levels. The next area of resistance is around 579.5 and 583.2, while 1st support hits today at 567.1 and below there at 558.3.
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 Thursday, 30 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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