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-- Posted Thursday, 8 June 2006 | Digg This Article
METALS: OVERNIGHT CHANGES THROUGH 4:00 AM: GOLD -7.30, SILVER -23.50
London Gold Fix $619.00 -4.50 LME COPPER STKS 112,400 ml tns
+4,400 tons
GOLD stks 7.795 ml oz, -96 oz COMEX SILVER stks 106.8
ml oz, -290,361 oz OVERNIGHT ACTION: Chinese gold finished lower, with European gold down off the Dollar. GOLD: OUTSIDE MARKET DEVELOPMENTS: Apparently the gold market sees the death of the key terrorist in Iraq as a negative and with the Dollar apparently lifted as a result of the US military progress, it is not surprising to see the Dollar rise. With the Dollar rising to within close proximity to an upside breakout point on the charts, it would certainly seem like the US gold market will be confronted mostly bearish outside market conditions again today. In fact, with the stock market moderately lower and oil prices falling, there would seem to be a number of bearish outside market forces presented to gold this morning.
GOLD MARKET FUNDAMENTALS: While some might suggest that seeing sharply lower oil prices will eventually serve to limit the moderate global slowdown that so many analysts are predicting, it appears that gold is currently in no position to embrace the positives. News that Russian Gold and currency reserves grew by $3.7 billion on the week, reiterates the recent forecast of a $5 to $6 billion May to June expansion of reserves in that country. With the market recently seeing predictions Russia was set to become the world's 4th largest gold holder, it certainly seems like Russia is plowing at least part of its rising flow of Petro-Dollars into gold. In the near term, the threat of higher US rates and lower Iranian geopolitical anxiety looks to keep gold prices under pressure even though the headlines continue to carry a number of upbeat longer forecasts for gold prices. With the ECB also expected to hike interest rates this morning, the gold market probably feels like the whole interest rate theme is set to sit on the gold markets back for at least another two sessions. A number of traders are pointing to a gap area on the charts down around $614 to $613.50, as a critical support zone, while other Press outlets have pegged a much lower $585 level as the next support zone for August gold! From early market action this morning and the scheduled report slate later today, there doesn't seem to be much that looks to alter the early negative track in prices. As we have suggested a number of times this week, the market looks to be in a profit taking posture and the $613.50 level might be the next stopping point on the downside. In fact, we look at a number of outside market indications and the deteriorating macro economic outlook and we can certainly understand the slide in gold and other physical metals markets. About the only thing that doesn't make sense, is the ongoing strength in the Dollar, as the threat of rising interest rates is now being met with growing concern that the US could be set to over tighten. When one adds in the threat of higher ECB rates to the lower oil and lower equity market action, it is clear that all roads are pointing downward. About the only hope of the bull camp in the near term, is that moderately lower prices will suddenly inspire more significant investment interest in the metals. Critical support is $620 and then at $613.5. SILVER: OUTSIDE MARKET DEVELOPMENTS: With copper and platinum prices under moderate pressure early today and the world equity market showing more weakness, it seems that a number of outside market elements are set to pressure silver prices further. While a higher Dollar is an indirect influence on silver, seeing gold down sharply, as a result of the Dollar strength simply adds to the silver bull's burden. In fact, with a number of economists suggesting that the US economy is set to slow for the entire 2nd half of 2006, it is clear that the trade is "bearing up" on the economy. In conclusion, at least part of the aggressive selling in the physical demand driven commodity markets is justified by a fear of slowing demand.
SILVER MARKET FUNDAMENTALS: With the view of slowing in the US, being enhanced by the thought that the Euro zone is also set to pull back on growth with higher rates, the silver market is certainly confronted with an array of negatives. In fact, another minor decline in silver stocks overnight is simply lost in the mostly bearish tide of sentiment this morning. With many commodity markets back on their heels this morning, one can hardly expect the investment psychology theme in silver to step in quickly and alter sentiment. In fact some players have suggested that it might take significantly lower oil prices just too effectively improve the macro economic outlook even to rejuvenate investment interest in commodities. While volume and opening interest have seemingly hooked up slightly on the last 4-5 days action, it is clear that fresh buying interest hasn't been able to counter the dominance of the sellers. In fact, despite talk that new silver investment vehicles (ETF's) have met lofty demand expectations, the trade just doesn't seem interested in bullish developments. Some traders might suggest that July silver is headed to a quasi gap area down around $11.24 to $11.23. In fact, given the breadth of negative psychology present in the marketplace and the weakness in equities, we can't argue against a continuation of the slide and a re-test of even numbers at $11.00. In fact, with a number of equity players suggesting that equity prices will continue to "adjust" to even lower levels, it would not seem like many in the trade want to embrace the positives. In fact, killing the lead insurgent in Iraq could have been a positive macro economic development, but yet the market seemingly discounted that potential overnight. Aggressive traders might consider selling July silver on any rally back to 11.65 today, looking for a downside targeting of $11.23. METALS TECHNICAL OUTLOOK 6/8/2006 COMEX SILVER (JUL) 06/08/2006: A bullish signal was given with an upside crossover of the daily stochastics. Daily stochastics are showing positive momentum from oversold levels, which should reinforce a move higher if near term resistance is taken out. The market's short-term trend is negative as the close remains below the 9-day moving average. The outside day up is somewhat positive. The close over the pivot swing is a somewhat positive setup. The next upside objective is 1228.5. The next area of resistance is around 1214.0 and 1228.5, while 1st support hits today at 1164.1 and below there at 1128.5. COMEX GOLD (AUG) 06/08/2006: The major trend has turned down with the cross over back below the 60-day moving average. Momentum studies are declining, but have fallen to oversold levels. The market's short-term trend is negative as the close remains below the 9-day moving average. The market's close below the pivot swing number is a mildly negative setup. The next downside objective is 617.3. The next area of resistance is around 639.0 and 643.3, while 1st support hits today at 626.1 and below there at 617.3.
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, 8 June 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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