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-- Posted Friday, 16 June 2006 | Digg This Article
METALS: OVERNIGHT CHANGE to 4:00 AM:London Gold Fix $581.50 +7.25 LME COPPER STKS 104,700 ml tns +150 tons GOLD stks 8.032 ml oz, Unchanged OZ COMEX SILVER stks 105.8 ml oz, -1,832,917 oz OVERNIGHT ACTION: Most spot prices higher overnight with the bulls regaining confidence OUTSIDE MARKET DEVELOPMENTS: With the Dollar marginally lower again today, the key metals futures markets all up in sync and the energy market showing a positive track again today, it would seem like gold and silver are presented with a mostly supportive outside market influence. With the stellar recovery bounce in the equity market over the last two sessions and the US Fed Chairman providing some macro economic optimism late yesterday, there is at least some countervailing force to the recent broad based commodity liquidation mentality. The US economic report schedule today is somewhat thin with the University of Michigan sentiment figures and the current account, but the metals markets have also been impacted quite markedly by Fed speeches recently. Today there are three Fed speeches scheduled. However, traders should not discount the Current account figures as that could accentuate concern toward the Dollar GOLD MARKET FUNDAMENTALS: While the gold might initially see some support from the lower Dollar action, many traders suggest that the September Dollar will have to fall below 85.26 to provide fresh buying incentive to the gold market. However, in a strange historical reaction, the gold market was lifted by suggestions from the Fed Chairman that inflation is not yet being passed along to consumers. In other words, the gold market is still being dominated by the expectation for growth and isn't necessarily being driven directly by inflationary psychology. On the other hand, the gold market should have been supported by news yesterday that direct foreign investment flows to the US, in the latest monthly report, were not at a level that could in effect finance or balance the US trade deficit. There is a school of thinking that suggests a net out flow of money from the US, will eventually result in a current account balance crisis or it could result a general loss of confidence in the Dollar and that in turn would support gold prices. In the latest weekly figures, Russia showed a minor up tick in gold and currency reserves and the Press this morning is trumpeting the fact that Russia has now reached the number 4 spot in the world's largest holders of gold. In the end, renewed interest in a host of commodities and suggestions from the Fed's Poole overnight that US inflation pressures may still be building, should generally leave the bull camp with an early edge in the action today. With the rise overnight and the Press generally up beat toward commodities again, it would seem like the gold market starts out the final trading session of the week on a more positive footing than was present yesterday. In fact, if the view toward the equity market (and therefore the economy) remains up beat, we would not be surprised to see gold claw its way back to the critical psychological level of $600. Near term critical support in August gold comes in today at $580.2 and $575, with initial resistance pegged at $592.6. In the near term, we would expect August gold to settle in a range bound by $572 and $607. However, in order to extend the gains and entrench the consolidation above the recent lows, the slowing mentality must stay out of the headlines. SILVER MARKET FUNDAMENTALS: Certainly the silver market is showing signs of recovery and it would seem like the US equity market bounce played a large role in the renewed optimism. With all the metals higher again this morning and up in somewhat more convincing style than was seen yesterday, it would seem like the bull mentality is set to control prices early today. The amount of Silver held by the IShares Trust bounced back to 68.4 million ounces overnight and exchange stocks of silver declined by almost 2 million ounces yesterday, which means that short term supply news is mostly supportive. However, the silver market appears to be heavily reliant on a positive investment attitude and that kind of attitude is mostly dependant on positive equity market action and perhaps even positive guidance from the platinum and copper markets. Technical traders are still looking for volume and open interest to rise on higher price action, as that would confirm to them that many traders still prefer the upside to the downside in silver. Since the April 20th top, both volume and open interest figures have declined and that could mean that the market wasn't wholeheartedly supportive of the slide in prices. We concede a positive bias early in the session today, with the September silver seeing solid support on the charts at $10.00 and near term resistance pegged at $10.50. Unfortunately the silver market will probably trade in close sync with the S&P, as the market isn't totally on board with a positive commodity market view. In other words, the market has to be convinced that the Fed isn't set to slow the economy further, in an attempt to keep inflation under control. The proof of this link in prices was seen yesterday, when the Fed Chairman suggested that inflation was still under control in the US and that resulted in a very impressive equity market rally! METALS TECHNICAL OUTLOOK 6/16/2006 COMEX SILVER (JUL) 06/16/2006: 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. With the close over the 1st swing resistance number, the market is in a moderately positive position. The next downside target is now at 977.8. The 9-day RSI under 30 indicates the market is approaching oversold levels. The next area of resistance is around 1009.5 and 1027.8, while 1st support hits today at 984.5 and below there at 977.8. COMEX GOLD (AUG) 06/16/2006: Daily stochastics declining into oversold territory suggest the selling may be drying up soon. The close below the 9-day moving average is a negative short-term indicator for trend. The close over the pivot swing is a somewhat positive setup. The next downside objective is now at 562.4. The market is approaching oversold levels on an RSI reading under 30. The next area of resistance is around 575.3 and 582.4, while 1st support hits today at 565.3 and below there at 562.4.
-- Posted Friday, 16 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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