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-- Posted Thursday, 11 May 2006 | Digg This Article
METALS: OVERNIGHT CHANGES THROUGH 4:00 AM: GOLD +4.00, SILVER +4.50
London Gold Fix $707.00 +2.70 LME COPPER STKS 113,650 ml tns -2,275 tns
GOLD stks 7.67 ml oz, +49,460 oz COMEX SILVER stks 123.5
ml oz, -589,633 oz OVERNIGHT ACTION: More new highs in gold overnight despite moderate strength in the Dollar! GOLD: OUTSIDE MARKET DEVELOPMENTS: Apparently the international trade in gold is discounting the influence of the Dollar today, as the Greenback has made a significant bounce in the wake of the recent US rate hike and the accompanying inflation focus from the Fed and yet the gold market is initially unfazed by the Dollar action. We suspect that the ongoing strength in world equity markets in the face of firming oil prices and talk yesterday that China was considering building strategic reserves in oil and other critical commodity markets, simply accentuates the inflationary expectation and that in turn should feed trading interest into gold. In fact, many in the market feel that the step wise moves to raise global interest rates have yet to have any impact on the consumption of commodities. Therefore both physical demand expectations and uncertainty buying interest should continue to favor the bull camp in gold.
GOLD MARKET FUNDAMENTALS: With another strong overnight opening salvo, the gold market posted another new high and in the process the media buzz seems to have facilitated interest in gold. While the Iranian situation might not provide specific influence on gold today, that situation is probably an issue that is discouraging sellers and continues to embolden would-be buyers. Some in the trade are discounting the talk of Chinese central bank buying of gold, but given surging currency reserves in China and generally surging reserves at a large number of central banks, just maintaining standard diversification rules probably results in some gold buying. With the US stopping short of accusing the Chinese of manipulating its currency, financial tensions between the two countries will remain tense, but the threat of a trade war is reduced slightly. In short, there really isn't a dominating flight to quality element present in the headlines this morning, but there are certainly a large number of issues that are facilitating interest in the precious metals. In the end, there is flight to quality, inflation, strong physical demand expectations and several geopolitical concerns that would seem to give the bulls the edge again today. While the gold market managed to shake off the Fed and in the process shake off a partially undermining two sided trade on Wednesday, prices have continued to grind higher and in the process are managing to entrench in the headlines. Remaining entrenched in the headlines means that gold will be seen as a primary play in the face of geopolitical uncertainty. With platinum and copper managing another round of new highs overnight, the Chinese providing a large measure of support with talk of strategic commodity buying, Nigerian tensions bubbling back to the surface again and perhaps most importantly, energy prices firming back up again, it would seem like all the usual bull suspects are present once again. Near term targeting in the June gold is $725 and close-in support is seen this morning at $704.6. SILVER: OUTSIDE MARKET DEVELOPMENTS: With gold, platinum and copper all higher this morning, we suspect that a higher Dollar is of little importance to silver. With world equity markets overnight generally higher and more importantly not overly concerned in the wake of the US rate hike, it would seem like the macro economic condition is mostly supportive of the bull case in silver. The silver market continues to see evidence of solid investment interest on a global basis, with shares of mining companies well bid and stock markets that are generally dominated by mining shares (Canada & Australia) registering consistent strength! Therefore, the outside market impact remains positive to silver.
SILVER MARKET FUNDAMENTALS: It is a little surprising that silver isn't getting spillover over buying support from the talk of Chinese reserve buying but with the news headlines mostly carrying discussions of Chinese Central bank gold buying and Chinese copper buying, it is also clear that there has not been a specific reference to silver. However, with open interest in the futures rising rapidly, investment vehicle interest very strong and inflation expectations surfacing as a result of the broad based commodity price rise, it would seem that investment and physical demand will both be consistently revised upward. One would also think that the lack of new highs in silver, over the last month would mean that silver will begin to see more investment support from those looking for a cheap fresh entry into the metals markets. Investment interest for silver continues to rise, even if silver futures prices continue to lag behind the rest of the precious metals complex. In fact, IShares holdings of silver reached 58.4 million ounces on Wednesday, with trading volume rising to 1.39 million shares yesterday. With inflation expectations on the rise, growth facilitating physical demand and uncertainty rampant in the currency and energy markets, there is no reason to think that the silver rally has run its course. However, the inability to charge to new highs means that the sellers aren't as afraid of silver as they are gold, platinum and copper. Near term support should be solid at $14.00 and resistance should continue to be the old high at $14.85 basis the July contract. METALS TECHNICAL OUTLOOK 5/11/2006 COMEX SILVER (JUL) 05/11/2006: 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. It is a slightly negative indicator that the close was lower than the pivot swing number. The next upside objective is 1470.3. The next area of resistance is around 1450.5 and 1470.3, while 1st support hits today at 1405.5 and below there at 1380.3. COMEX GOLD (JUN) 05/11/2006: The market rallied to a new contract high. Studies are showing positive momentum but are now in overbought territory, so some caution is warranted. The market's close above the 9-day moving average suggests the short-term trend remains positive. With the close higher than the pivot swing number, the market is in a slightly bullish posture. The next upside objective is 713.7. With a reading over 70, the 9-day RSI is approaching overbought levels. The next area of resistance is around 710.9 and 713.7, while 1st support hits today at 700.5 and below there at 692.8.
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, 11 May 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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