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OUTSIDE MARKET DEVELOPMENTS: With the US Dollar only slightly weaker this morning and gold and silver prices showing a very firm bid, it would not seem like the action in the currency markets was the primary catalyst behind the bullish action in the metals markets. With sharply higher equity market trade it is possible that an improvement in macro economic sentiment was providing the bull camp with a lift this morning. Some traders are suggesting that stronger than expected earnings from the UK bank Barclays was the primary force that served to improve overall macro economic sentiment today, while others suggested that the presence of a 30 day grace period for Greece was providing a temporary all clear signal. However, the markets could have been a little disappointed by the weak German ZEW readings overnight, but that information was seemingly overshadowed by the Barclays news and by the expectation of somewhat positive US scheduled data flows later this morning. With the US scheduled to release an Empire State Manufacturing report and a NAHB Housing Index reading and the trade calling for minimally positive readings in both those reports, it is possible that the US Dollar will remain off balance and physical commodities like gold and silver will be supported by today’s data.
GOLD MARKET FUNDAMENTALS: With a definitive range up extension this morning on the charts, the April gold contract has managed to reach the highest level since February 3rd. In addition to an improved macro economic condition this morning, the gold trade seems to be somewhat relieved that the situation in Greece might be put on hold for a full month. The gold market might also have garnered some support from a string of favorable US and UK corporate earnings reports this morning, as that news seems to have reversed the patently bearish economic sentiment that seemed to be settling into the markets last Friday. Surprisingly Indian gold market action overnight was mostly unimpressive and that suggests that improvement in developed country economic sentiment is indeed a major component of the bull case this morning. However, with April gold managing to climb back above the 50 day moving average early this morning, that action has fostered some talk that the gold market might be throwing off the downward bias that has periodically dominated the trade since the early December 2009 top. At least in the early going today, it would appear that favorable equity market action means more to the gold bulls, than minor US Dollar weakness.
SILVER MARKET FUNDAMENTALS: As in the gold market, the silver market bulls appear to be cheered by the idea that Greece has been given a 30 day grace period. It is also likely that favorable UK bank earnings news from Barclays is adding into the positive macro economic tilt this morning in silver. In short, silver appears to be deriving most of its upward action off an improvement in macro economic sentiment and not necessarily from minor declines in the US Dollar. Unlike the gold market, the silver market hasn’t been able to regain its 50 day moving average, which surprisingly sits all the way up at $17.19 in the May silver contract. For the time being, silver appears to be acting like a physical commodity market, that is seeing a modest improvement in overall psychology but it is also possible that distinctly favorable US equity market action will be the key to the silver bull’s near term control over prices. Unfortunately for the bull camp, the silver market was once again presented with news of a rather sharp gain in physical silver production from Pan American silver over the weekend but apparently the silver trade is discounting bearish supply side news in favor of an improvement in overall physical commodity demand expectations.
PLATINUM: Like the rest of the physical commodities, platinum is apparently poised to extend on the upside. With a weaker Dollar and higher equities and perhaps even some favorable US scheduled data flow, we have to think that April platinum is capable of a near term rise back above the $1,550 level. The Commitments of Traders Futures and Options report for platinum showed that as of February 9th, the Non-Commercial and Non-reportable combined traders held a net long position of 22,532 contracts, which represents a decrease of only 100 contracts in their prior net long position. However, with April platinum to this morning’s highs, already sitting as much as $38 an ounce above the level where the COT report was measured, the net spec positioning in platinum is clearly understated.
Precious Metals Market Commentary – 2010.02.16
by Dave Hightower on February 16, 2010
Below is a sample of our Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!
OUTSIDE MARKET DEVELOPMENTS: With the US Dollar only slightly weaker this morning and gold and silver prices showing a very firm bid, it would not seem like the action in the currency markets was the primary catalyst behind the bullish action in the metals markets. With sharply higher equity market trade it is possible that an improvement in macro economic sentiment was providing the bull camp with a lift this morning. Some traders are suggesting that stronger than expected earnings from the UK bank Barclays was the primary force that served to improve overall macro economic sentiment today, while others suggested that the presence of a 30 day grace period for Greece was providing a temporary all clear signal. However, the markets could have been a little disappointed by the weak German ZEW readings overnight, but that information was seemingly overshadowed by the Barclays news and by the expectation of somewhat positive US scheduled data flows later this morning. With the US scheduled to release an Empire State Manufacturing report and a NAHB Housing Index reading and the trade calling for minimally positive readings in both those reports, it is possible that the US Dollar will remain off balance and physical commodities like gold and silver will be supported by today’s data.
GOLD MARKET FUNDAMENTALS: With a definitive range up extension this morning on the charts, the April gold contract has managed to reach the highest level since February 3rd. In addition to an improved macro economic condition this morning, the gold trade seems to be somewhat relieved that the situation in Greece might be put on hold for a full month. The gold market might also have garnered some support from a string of favorable US and UK corporate earnings reports this morning, as that news seems to have reversed the patently bearish economic sentiment that seemed to be settling into the markets last Friday. Surprisingly Indian gold market action overnight was mostly unimpressive and that suggests that improvement in developed country economic sentiment is indeed a major component of the bull case this morning. However, with April gold managing to climb back above the 50 day moving average early this morning, that action has fostered some talk that the gold market might be throwing off the downward bias that has periodically dominated the trade since the early December 2009 top. At least in the early going today, it would appear that favorable equity market action means more to the gold bulls, than minor US Dollar weakness.
SILVER MARKET FUNDAMENTALS: As in the gold market, the silver market bulls appear to be cheered by the idea that Greece has been given a 30 day grace period. It is also likely that favorable UK bank earnings news from Barclays is adding into the positive macro economic tilt this morning in silver. In short, silver appears to be deriving most of its upward action off an improvement in macro economic sentiment and not necessarily from minor declines in the US Dollar. Unlike the gold market, the silver market hasn’t been able to regain its 50 day moving average, which surprisingly sits all the way up at $17.19 in the May silver contract. For the time being, silver appears to be acting like a physical commodity market, that is seeing a modest improvement in overall psychology but it is also possible that distinctly favorable US equity market action will be the key to the silver bull’s near term control over prices. Unfortunately for the bull camp, the silver market was once again presented with news of a rather sharp gain in physical silver production from Pan American silver over the weekend but apparently the silver trade is discounting bearish supply side news in favor of an improvement in overall physical commodity demand expectations.
PLATINUM: Like the rest of the physical commodities, platinum is apparently poised to extend on the upside. With a weaker Dollar and higher equities and perhaps even some favorable US scheduled data flow, we have to think that April platinum is capable of a near term rise back above the $1,550 level. The Commitments of Traders Futures and Options report for platinum showed that as of February 9th, the Non-Commercial and Non-reportable combined traders held a net long position of 22,532 contracts, which represents a decrease of only 100 contracts in their prior net long position. However, with April platinum to this morning’s highs, already sitting as much as $38 an ounce above the level where the COT report was measured, the net spec positioning in platinum is clearly understated.
Tags: Gold, Metals, Platinum, Silver
About Dave Hightower