GOLD:
GOLD MARKET FUNDAMENTALS: With a number of markets factoring expectations of slower growth ahead and oil prices falling enough to lower flight to quality concerns rather significantly, we suspect that the buyers will be few in number in the early going today. In other rumors being tossed around, some in the trade are fearful of renewed central bank sales ahead of the September 26th selling deadline and that simply adds to the collection of mostly bearish gold market fundamentals. In fact, while there appears to be a bit of consolidation taking place again in the gold industry this morning, the market might not be in a position to benefit from marginally supportive physical supply and demand developments. With a series of Press reports this morning predicting a sharp slide below even number $600 level and others noting the slide below the 200 day moving average line, the trade might be looking to the next lower chart support level of $580 as a potential target this week. Recent positioning reports suggest that the net spec long position justifies ongoing selling and with the majority of the classic fundamental factors seemingly facilitating the liquidation, it could take a surprise headline development just to alter the current pattern in prices. While the September 5th Commitment of Traders with Options report showed the Gold Non-Commercial position to still be net long 95,958 contracts and the Non-reportable position to also be net long 37,855 contracts, that probably leaves the market vulnerable to more long liquidation. Even with the spec long position reading registered right on the high last week and December gold coming into the action this morning roughly $45 per ounce below the level where the COT report was measured, we still suspect that the market has more selling capacity. Near term downside targeting is seen at $593 and then again down at $580. In short, the gold market needs a sharp slide in the Dollar, a recovery in economic expectations or a recovery in oil prices to bottom and right now that combination isn't even in the ball park.

SILVER:
SILVER MARKET FUNDAMENTALS: With the gold market under significant pressure and the rest of the metals markets joining into the aggressive washout, the silver market would seem to have little alternative but to give ground. In fact, with the added weight of concerns of economic slowing, the December silver looks to suffer broad based investor and speculative liquidation. With the psychological level of $12.00 failing overnight and the market seeing little in the way of close-in chart support until the $11.50 level and the 200 day moving average sitting all the way down at $11.09, there would seem to be plenty of potential for volatility directly ahead. Even the copper market is under pressure today and that would seem to suggest that both physical and financial market psychology is presenting a negative case to silver today. As in the gold market, the silver market has also recently registered a rather significant spec and fund long positioning and that seems to be facilitating stop loss selling especially in the wake of mostly discouraging fundamental and technical conditions. With the September 5th Commitment of Traders with Options report showing the Silver Non-Commercial position to be net long 25,119 contracts and the Non-reportable position also net long 22,786 contracts, there is certainly cause to suspect more long liquidation ahead. However, into the opening this morning, the silver market is roughly $1.27 below the level where the COT report was calculated and that could mean that silver is closer to a leveled technical position than the gold market. With the next critical support level seen at $11.51, we suspect that prices will continue to decline and given the aggressive downside momentum, it could take a series of potentially bullish developments just to turn the tide of selling off.

METALS TECHNICAL OUTLOOK 9/11/2006

COMEX SILVER (DEC) 09/11/2006: Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The close under the 18-day moving average indicates the intermediate-term trend could be turning down. The gap down on the day session chart is bearish with more selling pressure possible today. The market setup is somewhat negative with the close under the 1st swing support. The next downside objective is now at 1194.2. The next area of resistance is around 1246.3 and 1261.1, while 1st support hits today at 1212.8 and below there at 1194.2.

COMEX GOLD (DEC) 09/11/2006: A bearish signal was triggered on a crossover down in the daily stochastics. Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The market's short-term trend is negative as the close remains below the 9-day moving average. The market tilt is slightly negative with the close under the pivot. The next downside objective is 608.6. The next area of resistance is around 621.8 and 626.7, while 1st support hits today at 612.8 and below there at 608.6.