|
-- Posted Monday, 12 June 2006 | Digg This Article
METALS: OVERNIGHT CHANGES THROUGH 4:00 AM: GOLD -1.10, SILVER +3.00
London Gold Fix $607.75 -4.75 LME COPPER STKS 111,950 ml tns
+825 tons
GOLD stks 7.795 ml oz, -261 oz COMEX SILVER stks 105.3
ml oz, -409,496 oz OVERNIGHT ACTION: Tokyo Gold reached a 2 month low, European gold was mostly unchanged. GOLD: OUTSIDE MARKET DEVELOPMENTS: While the Dollar is slightly higher this morning, the currency markets are not really giving off a clear signal for the gold market in the early action today and that is surprising considering the recent G7 meeting. Oil prices are slightly supportive overnight due to indications that the Iranians think the EU incentives were weak and because of the suggestion from the IAEA that Iran continued to work on its enrichment program. With equity prices showing somewhat positive early action, it would seem like most outside market factors are favoring the bull camp. However, while broad equity market action overnight might be supportive, it should be noted that gold share action overnight was somewhat undermining to gold.
GOLD MARKET FUNDAMENTALS: Against the recent backdrop of price weakness and concern for the pace of world growth, it seems that the bear camp has managed to keep the trade off balance. With the market mostly expecting a series of Central Bank rates hikes ahead and at the same time seeing the Dollar track higher, the expectation for physical and flight to quality demand in gold is apparently reduced. One also gets the sense that flight to quality interest, off the whole inflation issue is also mostly muted. From the geopolitical front, the gold market might see a slight bit of support today, as the headlines are not quite as optimistic on the Iranian front, as they were late last week. In fact, with Iran upholding its nuclear rights in the face of a meeting of the IAEA, it is clear that they are standing fast to their quest to develop nuclear weapons. Therefore, we suspect that the gold market will see some hesitancy on the part of the bear camp. On the other hand, with a sweep of inflation readings due out this week and energy prices falling hard throughout the month of May, it is possible that the trade is disappointed with the inflation numbers this week. It is also possible that Fed dialogue will continue to limit gold in the week ahead, as the Fed prepares the market for its interest rate decision at the end of the month. As we have suggested already, the gold market might come into the action this morning with minimally supportive outside market developments, but we just don't get the sense that the gold market has totally shaken off the bearish mentality seen since the May high. The economy isn't strong enough, inflation isn't a direct threat, the Dollar is showing signs of strength instead of weakness and lastly, the investment buzz is still alive but isn't making the same type of noise as was seen in the March through early May time frame. About the only glimmer of hope for the bull camp, is the news that Iran is apparently going to hold to their desire to continue uranium enrichment. The June 6th Commitment of Traders with Options report showed the Gold Non-Commercial position to be net long 93,691 contracts, with the Non-reportable position net long 37,007 contracts for a combined spec and fund long of 130,000 contracts. However, with the gold market looking to start trade this morning $23 an ounce below the level where the COT report was measured, the spec long position will probably start the week moderately below the level where the COT report was initially measured. In short, this market remains vulnerable to long liquidation and could easily venture down to the even number $600 level this week. On a more positive longer term note, volume and open interest patterns on the break are not showing widespread participation in the selling effort and that could eventually help the August contract bottom around the $592 level. SILVER: OUTSIDE MARKET DEVELOPMENTS: The silver market starts the new week with a slightly positive global equity market tilt, but partially negative industrial demand driven price action in platinum and copper. One might suggest that overall macro economic expectations are somewhat improved over last week, but one doesn't get the sense that the improvement in the macro economic case is that significant. In fact, with many commodity markets at times acting like there is a deflationary threat ahead, it might take a very strong equity market pattern just to countervail the generally bearish commodity liquidation pattern.
SILVER MARKET FUNDAMENTALS: With the gold market inconclusive and the industrial demand driven metals somewhat lower this morning, there continues to a lack of bullish buzz in the marketplace. While Silver IShares total net assets fell to $768 million last week, ounces of silver held by the trust mostly held steady at 66.9 million ounces into the close last Friday. Certainly exchange stocks have continued to decline, but stocks have yet to reach levels that put that story in the mainstream headlines. With the overnight decline, the July silver has pulled down to another critical psychological price level on the charts, but one just doesn't get the sense that the current market setup is overly conducive to a solid trend in either direction. The economy is somewhat sluggish, but is forwardly biased, inflation is also still an issue, but isn't currently seen as a threat to paper assets. Therefore, unless some critical dynamic changes in the headlines, the onus might be on the bull camp to take the leadership away from the bear camp. Near term downside targeting is seen at $11.00 and then again down at $10.83. Those that get long July silver at current levels might have to risk the position to $10.48 but with the recent COT report readings showing the net spec position to still be net long 43,000 contracts, the market is still capable of aggressive stop loss selling. However, with the July silver opening the US action this morning, nearly 80 cents below the level where the COT report was measured, it is possible that the net spec long is actually only 20,000 contracts long. Therefore, without an upward surge in the equity market or suggestions from the Fed that they will pause in June, we don't think the bear camp is set to relinquish control over the silver market. METALS TECHNICAL OUTLOOK 6/12/2006 COMEX SILVER (JUL) 06/12/2006: Momentum studies are still bearish but are now at oversold levels and will tend to support reversal action if it occurs. The market's close below the 9-day moving average is an indication the short-term trend remains negative. The market's close below the pivot swing number is a mildly negative setup. The next downside target is 1089.8. The next area of resistance is around 1139.5 and 1163.8, while 1st support hits today at 1102.5 and below there at 1089.8. COMEX GOLD (AUG) 06/12/2006: Daily stochastics declining into oversold territory suggest the selling may be drying up soon. The market's close below the 9-day moving average is an indication the short-term trend remains negative. The market tilt is slightly negative with the close under the pivot. The next downside objective is now at 604.9. The 9-day RSI under 30 indicates the market is approaching oversold levels. The next area of resistance is around 617.8 and 624.9, while 1st support hits today at 607.8 and below there at 604.9.
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, 12 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.
Previous Articles by Nell Sloane
|
