|
-- Posted Tuesday, 25 April 2006 | Digg This Article
METALS: OVERNIGHT CHANGES THROUGH 4:00 AM: GOLD +5.50, SILVER +59.00
London Gold Fix $627.75 +6.25 LME COPPER STKS 117,450 ml tns Unch tns
GOLD stks 7.696 ml oz, Unchanged COMEX SILVER stks 124.8
ml oz, Unchanged OVERNIGHT ACTION: Tokyo gold down in response to Monday losses, but European gold seemed to right the ship. GOLD: OUTSIDE MARKET DEVELOPMENTS: The Dollar has bounced back this morning, but that initially hasn't served to hold back gold from renewed buying interest. However, with oil prices mixed to slightly higher, silver and copper prices giving off a much more definitive bullish tilt, it is clear that the outside factors this morning are more beneficial to gold, than they were to start the week yesterday. On the other hand, while silver price action this morning is significantly more supportive to gold, some traders are suggesting that ongoing extreme volatility is keeping fears of renewed long liquidation alive. Overnight global equity market action was mostly non-descript, but some traders might suggest that is an improvement from the impact that was generally seen on Monday.
GOLD MARKET FUNDAMENTALS: While there have been a couple reports of rising gold production, it would not seem like ultra high prices have pulled supply rapidly toward the market. Last week, prior to the setback in prices, some Press outlets were reporting that scrap supply flow was potentially set to undermine Indian gold prices, but so far there has been limited long term change in the physical supply setup. On the other hand, buyers have appeared to show up on price weakness and that would seem to suggest that investment buyers are still on the sidelines and are willing to come into play in the face of slightly lower pricing. Certainly there has been some recent weak handed profit taking and certainly the funds are moving in and out of positions with high frequency and think that has served to undermine support under the market, but in general, the market has held up rather well in the face of a two week trading range in excess of $42 an ounce. While the US Dollar is initially stronger this morning and that could hold back gold, the trade is expecting to see a soft set of US economic numbers released early today and that could serve to knock the Dollar back away from its initial gains. On the other hand, a sharp rise in German Business confidence readings overnight should be slightly supportive of gold, as that hints at decent forward physical and investment demand for gold from the Euro zone. While we see an initial positive bias this morning, the June gold might have to hold above $621.3 just to remain positive from a technical perspective. Somewhat lower and more critical support is seen at $613.2 basis the June contract and to turn the tilt in the market definitively back to the upside, might require a move above $632. The strong German Confidence readings overnight are certainly a start in rekindling the investment flow toward gold, but to see a full return to the bull track might require a little more positive action from the US equity market today. Unfortunately the scheduled economic information today probably won't provide an upbeat look at the US economy. Therefore, the bull camp would look to have an edge, but options expiration today might instill some intense volatility to prices into the close today and that might also serve to send gold prices toward a strike price level. On the other hand, seeing copper and silver prices start the session out sharply higher probably causes bulls on the sidelines to move back into the market with early buys. SILVER: OUTSIDE MARKET DEVELOPMENTS: Stellar gains in copper this morning look to recreate part of the ultra bullish environment that was present prior to last week's debacle setback. Apparently the copper market is being lifted by renewed labor issues and that might serve to underpin all of the metals markets against some of the recent downside pressure. However, a slightly positive bias this morning in world equity markets should embolden early buyers but that positive tilt could be dampened slightly after the scheduled US economic reports are released. This morning oil prices are mixed and therefore don't initially look to be a major impact on silver prices.
SILVER MARKET FUNDAMENTALS: While it would be a bald speculation to predict labor problems in silver and gold operations, with fresh labor setbacks in copper seem to make it very clear that historical profitability in the mining sector has already spawned a tide of wage renegotiations. With May silver more than doubling in value since last September and metal workers in South America and Asia threatening more strikes, if their demands are not met, one can't rule out a future supply wrinkle in silver or gold. In the near term, it is clear that small specs and funds see some type of critical pricing zone around the $11.86 level but in the near term the market also seems to be poised to fluctuate wildly in both directions. As mentioned before, the silver market seems to have some fundamental and technical interest in the $11.86 level basis the May contract and that same level might be seen at $11.80 in the July contract. In order to see silver prices lift back up toward the recent highs, might require a recovery in equity prices, an even more significant extension in copper gains and perhaps most importantly, more information like the supportive 15 year high in the German Confidence readings. In other words, the silver market needs the same type of news that lifts stock prices. While some might suggest that silver and gold need more flight to quality information, we beg to differ as the Egypt bombing overnight seemed to offer nothing to the precious metals markets overnight. Those that took our advice to enter a long July Silver futures position with a long put and short call offset, should have seen the options offset a huge portion of the pressure seen in the futures position into the lows yesterday. Continue to hold long positions, but continue to hold options protection on those positions. METALS TECHNICAL OUTLOOK 4/25/2006 COMEX SILVER (JUL) 04/25/2006: Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The market back below the 18-day moving average suggests the intermediate-term trend could be turning down. The market is in a bearish position with the close below the 2nd swing support number. The next downside objective is 1098.4. The next area of resistance is around 1246.7 and 1328.3, while 1st support hits today at 1131.7 and below there at 1098.4. COMEX GOLD (JUN) 04/25/2006: Momentum studies trending lower from overbought levels is a bearish indicator and would tend to reinforce lower price action. A positive signal for trend short-term was given on a close over the 9-bar moving average. The market setup is somewhat negative with the close under the 1st swing support. The next downside target is 615.6. The next area of resistance is around 628.8 and 635.3, while 1st support hits today at 619.0 and below there at 615.6.
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, 25 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.
Previous Articles by Nell Sloane
|
