GOLD:
GOLD MARKET FUNDAMENTALS: While the gold market is lower as of this writing, the market did manage to hold above what many suggest is a critical support zone on the charts of $625. There have been several Press reports over the last two sessions that have suggested that bullishness among gold market timers is running at a high level, but one would expect bullishness to be running hot with the gold market managing to forge a $75 per ounce rally in less than 3 weeks. Overnight another major brokerage firm came out with a broad based bullish forecast for Commodities in general and the Anglogold COO indicated that his company is bullish on gold prices and therefore the Press flow continues to support the bull case. In another bit of supportive dialogue, the World Gold Council has apparently released a study suggesting that gold does indeed work as a hedge against a declining Dollar and rising inflation and that is probably well received in the current environment. However, it would seem that new record highs in a number of energy markets yesterday, provided the most significant development for gold, and seeing the US non Farm payroll reading on Friday hold together, could end up putting the gold market back into a similar position, as was seen prior to the steep May and June correction. In short, the trade looks to remain favorably biased toward gold, as long as ultra high energy prices don't trip up economic sentiment. While the $625 level looks to be solid support on the charts. We suspect that volatility is set to expand rather significantly into the US payroll report. We also suspect that August gold will be somewhat restrained by overhead resistance around the $637 level but unless the Dollar manages a rise back above the 85.50 level, we will assume that the trend is pointing upward. In order to rise to an even higher trading range than $625 to $635, the gold market will have to see the US numbers over the coming two sessions project growth and energy prices will have to hold their recent gains. In the near term, we can't rule out a move to close a gap down at $618 to $619.5 but with the Press trumpeting the virtues of gold rather consistently, we suspect that buyers will be prepared to buy dips.

SILVER:
SILVER MARKET FUNDAMENTALS: While the silver market continues to hold within close striking distance of the recent high, exchange stocks increased sharply overnight and volume of trade in the silver ETF remains somewhat soft. However, the market does seem to be getting general support from Press articles and the gold market is throwing off enough safe-haven talk, that the silver can generally expect to see spillover support. With both platinum and copper a bit lower this morning the industrially demand driven component of the silver trade is undermined somewhat. Traders are suggesting that September silver has forged some support around the July 3rd close and the July 5th opening of $11.39, while others suggest that resistance is expected today around the $11.45 high. As in the gold market the bull camp seems to have an edge but the biggest threat to that view, might come from too much weakness in economic numbers or the stock market. Unfortunately exchange stocks jumped up by 1.2 million ounces and volume and open interest declined on the recent wave up and that sets a partially negative technical condition in place. While the upcoming payroll report might end up supporting silver, the market is somewhat overbought and could be temporarily undermined as a result of the figures. In fact, traders had better be prepared to weather a temporary setback below the $11.00 level in the coming two sessions. In our opinion, those long September silver might have to risk position to $10.75 in the coming two days.

METALS TECHNICAL OUTLOOK 7/6/2006

COMEX SILVER (SEP) 07/06/2006: The upside crossover (9 above 18) of the moving averages suggests a developing short-term uptrend. Positive momentum studies in the neutral zone will tend to reinforce higher price action. A positive signal for trend short-term was given on a close over the 9-bar moving average. Follow through buying looks likely if the market can hold yesterday's gap on the day session chart. The market's close above the 2nd swing resistance number is a bullish indication. The next upside target is 1162.5. The next area of resistance is around 1154.0 and 1162.5, while 1st support hits today at 1129.1 and below there at 1112.5.

COMEX GOLD (AUG) 07/06/2006: The upside crossover (9 above 18) of the moving averages suggests a developing short-term uptrend. Momentum studies are trending higher from mid-range, which should support a move higher if resistance levels are penetrated. The market's short-term trend is positive on the close above the 9-day moving average. The gap upmove on the day session chart is a bullish indicator for trend. The market's close above the 2nd swing resistance number is a bullish indication. The near-term upside objective is at 640.1. The next area of resistance is around 635.9 and 640.1, while 1st support hits today at 623.5 and below there at 615.3.