GOLD:
GOLD MARKET FUNDAMENTALS: With the gold market getting a distinct down move in the Dollar, the market sees the first directly favorable outside market development of the week. While the bull camp might only be able to claim a narrow string of supportive theme's, the recent consolidation around and mostly above the $580 level has fostered talk of a bottom. In addition to talk early this week of bargain hunting buying, the trade has also tossed around the idea of jewelry buying and late yesterday the market also talked up the prospect of more de-hedging action in the 4th quarter. Certainly the prospect of Indian gold buying is part of the current bull case, especially with overnight Indian Press reports of Indian buyers "splurging" on gold purchases ahead of the festival season. In a partially negative item overnight, Peter Hambro said that they remained on track to produce 1 million ounces of gold from Russia by 2009. Countervailing the long term threat of increased gold supply from Russia, is overnight nearer term talk that the Russian Central bank might be set to increase its gold reserves, which currently sit at just 3% of total reserves. With the overnight rise in gold the market seems to be poised to start the session out on the strongest footing of the week. However, a rally off the currency theme alone would seem to be only a 1 legged bull wave, as the concern for slowing and a lack of inflation seems to limit the market. However, with the market approaching the critical $600 level again, one can't rule out a temporary technical lift in prices. However, we continue to stand by the idea that the key element to a sustained bull case in the gold market, is a broad based expectation of expanding global growth and right now, the global economic outlook is at best choppy. A correction of oversold techs might yield a rally to $601.7 or even to $606.5, but we still think that a near term rally is still a rally within a correction.

SILVER:
SILVER MARKET FUNDAMENTALS: With gold prices higher overnight and silver following that move with a recovery of its own, the trade looks to be in a position for a bit of week ending short covering. Yesterday silver miner Coeur d'Alene suggested at Silver Summit, that silver market fundamentals are expected to remain strong. The US Miner also said that ongoing strong investment demand and periodic supply bottlenecks were expected to keep silver prices in an upward track and that is certainly the type of news the bull camp needs to counter recent bearish macro economic psychology. The Press also noted huge attendance at that Idaho Silver Summit and the Press is suggesting that is a sign of ongoing enthusiastic investor interest for silver. It should also be noted that silver exchange stocks have made a moderately large slide this week and that could be seen as another fresh supportive development for prices. It should be noted that December silver managed to rise above the 200 day moving average overnight and that could give the market a positive technical tilt in the early going. Traders have also noted a critical pivot point just above the early overnight highs at $11.523 this morning, which is the highest silver price September 11th. With the 200 day moving average regained overnight at $11.21, the currency markets helping and a moderate decline in silver exchange stocks overnight, the bull camp has the early edge. However as suggested in the gold comments this morning, we don't see the outlook on the economy to be strong enough yet to expect a major sustained recovery in silver prices. On the other hand, one can't rule out a rise above close-in resistance on the charts of $11.52 and perhaps even a rise to $11.90.

METALS TECHNICAL OUTLOOK 9/22/2006

COMEX SILVER (DEC) 09/22/2006: The crossover up in the daily stochastics is a bullish signal. The stochastics indicators are rising from oversold levels, which is bullish and should support higher prices. A positive signal for trend short-term was given on a close over the 9-bar moving average. It is a mildly bullish indicator that the market closed over the pivot swing number. The next upside target is 1152.3. The next area of resistance is around 1141.5 and 1152.3, while 1st support hits today at 1107.5 and below there at 1084.3.

COMEX GOLD (DEC) 09/22/2006: Momentum studies are still bearish but are now at oversold levels and will tend to support reversal action if it occurs. The market's close below the 9-day moving average is an indication the short-term trend remains negative. It is a mildly bullish indicator that the market closed over the pivot swing number. The next downside target is 579.2. The next area of resistance is around 592.4 and 595.7, while 1st support hits today at 584.2 and below there at 579.2.