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-- Posted Monday, 17 April 2006 | Digg This Article
METALS: OVERNIGHT CHANGES THROUGH 4:00 AM: GOLD +8.90, SILVER +39.00
London Gold Fix $597.00 n.a. LME COPPER STKS 111,650 ml tns -100 tns
GOLD stks 7.622 ml oz, +49,841 oz COMEX SILVER stks 124.7 ml oz,
+8,356 oz OVERNIGHT ACTION: Despite European market closures, overnight action was very firm. GOLD: OUTSIDE MARKET DEVELOPMENTS: Early indications call for a significantly weaker US Dollar this morning and with the Chinese reporting a rather surprisingly strong 1st quarter GDP reading last Friday, (during the US market closure) and the oil market sending off bullish signals, we can understand the very firm start in gold this morning. With the US floating a potentially critical International Capital flows report this morning, is it possible that even more flight to quality concern is fostered toward US Dollar denominated debt instruments and in general toward all paper assets.
GOLD MARKET FUNDAMENTALS: This morning there would seem to be a host of factors providing the bull camp with an edge. In addition to a sharply lower US Dollar and the psychological impact of oil reaching $70.00 a barrel, the gold market is seeing Press reports of Indian gold hoarding. In other words, conditions seem to be very conducive to ongoing investment interest in gold and the talk that Indian buyers are ignoring high flat prices for gold, would seem to temper at least part of the argument of lower physical and jewelry demand because of the steep rise in gold prices over the last 6 months. With a Barron's article over the weekend, talking up the inflation issue again and US Treasury prices also signaling a growing concern for inflation, the gold market would seem to be hitting on a number of different cylinders. In fact, after a significant gap up move overnight on the charts, it would appear that a number of players are moving toward gold and that is a significant reversal from the somewhat poor action last Thursday. With the market solidly into new highs overnight and the outside market forces almost exclusively bullish, we suspect that prices will continue to carve out even higher prices. The April 11th Commitment of Traders with Options report showed the Gold Non-Commercial position to be net long 128,048 contracts, with the Non-reportable position net long 44,451 contracts for a combined spec and fund long of 172,000 contracts. However, the net change in the spec long on the week, was a decline of 6,000 contracts and the market did trade $14 below last week's high at the lows last week and therefore we have to think that the spec and fund long has seen additional technical leveling than was present in the actual COT numbers. Some traders are suggesting that the Iranian situation and soaring oil prices are primarily responsible for the sharp gains this morning but in reality this bull market is getting help from a number of unrelated fronts and that should provide the market with a steady flow of additional buying interest. Near term support in the June gold is seen at $608.4 and then again down at $604. SILVER: OUTSIDE MARKET DEVELOPMENTS: With both gold and copper sharply higher, the Dollar initially back on its heels and global equity market action not showing much in the way of anxiety from the rise in oil prices, it would seem like silver market is set to receive another wave of fresh investment buying. With China reporting a 1st quarter GDP growth of 10.2% last Friday and the copper market also exploding overnight, it certainly feels like the flow of money toward all metals is accelerating.
SILVER MARKET FUNDAMENTALS: Apparently the trade continues to look at the gold/silver ratio as a sign that silver is still cheap, and with the standard precious metals concerns, of a falling Dollar and rising oil prices also wrapped into the equation this morning, it is clear that silver is getting buying interest from a number of different fundamental sources. In fact, with the move overnight, the May silver seems to have blasted right through the psychological $13.00 barrier. With favorable growth being talked up in both the Japanese and Chinese economies overnight and silver still thought to be cheap relative to gold, the silver market has managed to explode this morning even without all of the European markets open for business. As suggested before, the silver market has managed to blast away potential resistance around the psychologically important $13.00 level and with the aggressive acceleration on the charts and most of the outside market influences adding into the bull equation, we have to think that the next stop for silver will be up at $13.55 basis the July contract. The April 11th Commitment of Traders with Options report showed the Silver Non-Commercial position to be net long 44,546 contracts, with the Non-reportable position net long 25,418 contracts, for a combined spec and fund long of 70,000 contracts. Like the gold market, the silver market also saw its combined spec position drop in the latest COT report and that might leave the market with a little more buying potential than many traders might have expected. Near term critical support in the July silver is currently $13.00, but closer-in support might initially be seen at $13.20. METALS TECHNICAL OUTLOOK 4/17/2006 COMEX SILVER (MAY) 04/17/2006: A new contract high was made on the rally. The daily stochastics have crossed over up which is a bullish indication. Momentum studies are trending higher but have entered overbought levels. The market's close above the 9-day moving average suggests the short-term trend remains positive. The outside day up is a positive signal. Market positioning is positive with the close over the 1st swing resistance. The near-term upside target is at 1314.8. The market is giving an extremely overbought indicator with the RSI over 90. The next area of resistance is around 1303.5 and 1314.8, while 1st support hits today at 1267.5 and below there at 1242.8. COMEX GOLD (JUN) 04/17/2006: The daily stochastics gave a bearish indicator with a crossover down. Momentum studies are trending lower from high levels which should accelerate a move lower on a break below the 1st swing support. The market's close above the 9-day moving average suggests the short-term trend remains positive. It is a slightly negative indicator that the close was lower than the pivot swing number. The next downside objective is now at 591.9. The next area of resistance is around 603.5 and 605.6, while 1st support hits today at 596.7 and below there at 591.9.
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 Monday, 17 April 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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