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-- Posted Thursday, 20 July 2006 | Digg This Article
METALS: OVERNIGHT CHANGES THROUGH 4:00 AM: GOLD -2.50, SILVER +1.50
London Gold Fix $642.90 +1.30 LME COPPER STKS 94,525 ml tns
-400 tons
GOLD stks 8.065 ml oz. unchanged COMEX SILVER stks 102.9 ml oz
+153,362 oz OVERNIGHT ACTION: Gold was down slightly overnight in choppy trade. OUTSIDE MARKET DEVELOPMENTS: The markets were surprised yesterday by Fed Chairman Bernanke's testimony to the US Senate Banking Committee, which appeared to take a less hawkish tone towards inflation. Mr. Bernanke's comments that the Fed expects core inflation to ease in the next few quarters as the economy cools was taken as an indication that a rate increase was not imminent, and that was exactly opposite to what the trade was expecting going into the meeting. This sparked an abrupt reversal in the US Dollar after its sharp gains over the past two weeks, and it supported gains in the metals, particularly gold. The conflict in the Middle East is getting more violent but so far has not spread to other nations in the region. Crude oil prices were up slightly overnight after falling to its lowest level since June 29th yesterday. So far the market has not returned to the flight-to-quality psychology that seemed to dominate the market last week, but that could change if the Mideast conflict starts to effect oil flow and/or pulls other nations into the fighting.
GOLD:
GOLD MARKET FUNDAMENTALS: The trade was so confident that the Fed was going to raise rates yesterday that it was almost inevitable that Mr. Bernanke would surprise them. Economic indicators had come out strong earlier in the week, with Industrial Production coming in better than expected and the PPI and CPI coming in at or above expectations, and this fueled ideas for another rate hike. Now that it appears that the Fed is not leaning towards a rate hike, gold may be left to chop around within its recent range. The war in the Middle East should serve to underpin the market, but bulls could be expected to be cautious after the steep declines earlier this week. The jobless claims number due out this morning probably has less of an impact now that Fed Chairman Bernanke has spoken, but a decline significantly deeper than 17,000 could add fuel to yesterday's no rate cut sentiment and lend support to gold. Now that gold has traded in a $60 range in three sessions, we wouldn't be surprised if it consolidates in a 620-680 range as it digests the conflicting sentiment of the past few days.
ISHARES SILVER TRUST: The last trade was at 111.39, up 5.44 (5.14%) from the previous close with the volume at 232,600. SILVER:
SILVER MARKET FUNDAMENTALS: Silver gained from a weakening in the Dollar after the Fed Chairman's comments yesterday, but one has to wonder if the Fed perceives a slowdown in the economy, what does that do to physical demand? Stronger than expected economic readings earlier this week had suggested that the economy and industrial demand are on firm ground. Like gold, silver seemed to be tracking the dollar this week but now that the rate-hike hype has been quashed, the focus could switch back to the industrial demand, but the Middle East could underpin the market as well. Fighting there appears to be getting worse but so far does not appear to have affected oil flows. With the exception of Syria and Iran, other nations in the region have been restrained in their criticism of Israel to this point, but that could change as the war rages on. Silver could be range bound over the next few session after the volatile activity earlier this week. Look for support in September silver around 10.50 with resistance at 11.82. METALS TECHNICAL OUTLOOK 7/20/2006 COMEX SILVER (SEP) 07/20/2006: Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The market now above the 18-day moving average suggests the intermediate-term trend has turned up. Market positioning is positive with the close over the 1st swing resistance. The next downside target is 1049.5. The next area of resistance is around 1139.0 and 1155.5, while 1st support hits today at 1086.1 and below there at 1049.5. COMEX GOLD (AUG) 07/20/2006: The market now above the 60-day moving average suggests the longer-term trend has turned up. Momentum studies are trending lower from high levels which should accelerate a move lower on a break below the 1st swing support. The market's close below the 9-day moving average is an indication the short-term trend remains negative. The daily closing price reversal up on the daily chart is somewhat positive. A positive setup occurred with the close over the 1st swing resistance. The next downside objective is now at 617.2. The next area of resistance is around 653.9 and 661.9, while 1st support hits today at 631.6 and below there at 617.2.
-- Posted Thursday, 20 July 2006 | Digg This Article
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