GOLD:
GOLD MARKET FUNDAMENTALS: In addition to the fact that the gold has managed to rise overnight in the face of a minor Dollar bounce, it would seem that the bullish combination of rising equities and rising oil prices has manifest itself again. In other words, the market is still aware of the economic slowing threat but with the equities and oil prices rising in sync, it is likely that many would-be broad market commodity sellers are discouraged from attacking the market from the short side. Some players have suggested that the gold market could actually be supported by soft scheduled US economic numbers this morning, as that would not only undermine the Dollar (off the interest rate differential argument) but seeing the odds of future US rate hikes pulled down could also minimize the fears of over tightening. With the gold market managing a quasi upside breakout on the charts overnight, it is possible that the trade refers back to the positive news in gold early in the week that suggested gold bullion buying at the cash level had remained strong, despite the aggressive slide in prices. In short, the bull camp would seem to have control to start the session but the early US numbers could present the market with an important crossroads. With a new high for the move and the Dollar potentially undermined by the US numbers today, we suspect that August gold could manage a rise back above $560. So far, open interest has increased slightly on the June bounce but so far the market hasn't confirmed a full shift back into a bull trend with higher volume readings. However, the bull camp has to be emboldened by the pattern of higher equities and higher oil prices and that could mean that August gold is set to make $560 support into resistance. Near term critical support in August gold comes in at $589 and there might not be much in the way of resistance on the charts until the old $614 to $613.5 gap area.

SILVER:
SILVER MARKET FUNDAMENTALS: The silver market seems to be rising in sync with the gold market and with the copper market showing even more impressive gains this morning, it would seem like silver is getting support from the precious and industrial metals psychology. It is a little surprised that the silver and copper markets were able to discount the stories yesterday that predicted an end to the metals boom in China, but we suspect that favorable equity market action over the last 24 hours has allowed the silver market to downplay the threat of economic slowing. So far, the silver market hasn't seen volume and open interest patterns confirm the recent up trend in prices but some traders suggest that the market was significantly oversold from the May and June slide and that a certain amount of short covering is sure to keep open interest level under wraps. While gold might be lifted by soft US numbers this morning, the silver market might be just a little vulnerable to the readings. However, as long as the copper market remains well bid in the face of slack numbers, it is possible that silver will also end up discounting today's leading indicators and Friday's durables report. Some traders suggest that the September contract will have little resistance in the near term until the $11.05 level is revisited. Yesterday the ISHARES SILVER TRUST closed at 105.00, which was a gain of 2.14 or 2.08% from the previous close. While the volume of trade in the IShare instrument was improved from the prior day at 389,100 shares, the volume of trade remains generally soft when compared to the patently bullish market action seen in early May. We concede a bullish bias but the market will have to overcome massive overhead resistance on the charts to fully return to a bull market status. Unfortunately we doubt that the macro economic outlook is set to improve enough that September silver will be propelled back above the next significant resistance area on the charts of $11.05.

METALS TECHNICAL OUTLOOK 6/22/2006

COMEX SILVER (JUL) 06/22/2006: The stochastics indicators are rising from oversold levels, which is bullish and should support higher prices. 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 target is 1072.0. The next area of resistance is around 1060.0 and 1072.0, while 1st support hits today at 1024.1 and below there at 1000.1.

COMEX GOLD (AUG) 06/22/2006: Rising from oversold levels, daily momentum studies would support higher prices, especially on a close above resistance. A positive signal for trend short-term was given on a close over the 9-bar moving average. The market has a bullish tilt coming into today's trade with the close above the 2nd swing resistance. The near-term upside objective is at 604.7. The next area of resistance is around 600.0 and 604.7, while 1st support hits today at 582.0 and below there at 568.8.