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OUTSIDE MARKET DEVELOPMENTS: After the initial euphoria, concerns over the EU emergency aid package have revived strength in the Dollar again overnight and that in turn has put the euro under renewed pressure. As a result, equity markets throughout the world are weaker this morning. A prominent credit rating agency stated that downgrades were still possible for Greece and Portugal, even with the new EU aid package in place. Also a series of economic numbers from China for March released overnight showed that Chinese CPI was up 2.8%, Chinese PPI was up 6.8%, Chinese Industrial Production was up 17.8% and Retail Sales were up 18.5% from year-ago levels, all roughly in-line with expectations, but apparently those readings were strong enough to prompt fears of a Chinese rate hike ahead. UK Industrial Production for February was up a much higher than expected 1.9%, while German CPI for March was up an in-line 1.0%. The main US economic number this morning from the US will be February Wholesale Trade, which is generally expected to be up +0.3%. There will also be a 3 Year US Treasury Note auction result posted at mid day today.
GOLD MARKET FUNDAMENTALS: A rekindling of EU debt anxiety seemed to surface again last night, with a number of flight to quality markets like gold, registering action indicative of ongoing debt sector concerns. While some players are suggesting that the Chinese numbers overnight were capable of prompting a Chinese rate hike, those numbers on their face could also be considered supportive to metals prices. Surprisingly gold prices come into the US action higher this morning despite a weaker tone in the Indian gold market overnight. Some gold players are hopeful that the gold market will be able to benefit even if calmer financial waters surface ahead, as many economists suggest that the Euro zone stabilization plan could eventually be considered inflationary. However, the flight to quality angle in the gold market appears to have been a dominating focus of the trade recently and therefore the ebb and flow of anxiety is likely to remain a big influence on gold prices. It would appear that the ebb and flow of equity prices is the primary guide on anxiety levels and therefore gold and equities look to maintain an inverse relationship. Comex Gold Stocks were 10.269 million ounces up 29,018 ounces.
SILVER MARKET FUNDAMENTALS: While silver is showing some minor weakness this morning and appears to be diverging with the gold market, there doesn’t appear to be a major negative tilt facing physical commodity markets this morning. Certainly silver and other physical commodity markets are seeing some spillover weakness from the weaker global equity market action and perhaps because of lingering EU Debt fears. The market did see news of increased physical silver production from a key Canadian silver producer overnight, but minor changes in physical supply haven’t been given that much consideration lately. It is also likely that noted weakness in platinum and copper prices this morning have served to undermine silver prices. From the weak initial action in silver prices this morning, the trade seems to be suggesting that silver is still being viewed as a physical commodity, instead of a flight to quality instrument. Comex Silver Stocks were 116.548 million ounces down 196,140 ounces.
PLATINUM: The platinum market is logically under some pressure this morning, as macro economic optimism is missing today. However, the platinum charts appear to be giving off the impression that up trend channel support just under the market at $1,673 might be solid. However, the platinum market looks to be tightly correlated with the direction of global equity markets and that could mean some initial weakness this morning. On the other hand, in the event that the July platinum market manages to regain the $1,693.50 level, that could be a sign that the bulls have regained control over the market. In order for the bull camp to regain control might require a June S&P trade back above the 1150 level.
Metals Market Commentary – 2010.05.11
by Dave Hightower on May 11, 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: After the initial euphoria, concerns over the EU emergency aid package have revived strength in the Dollar again overnight and that in turn has put the euro under renewed pressure. As a result, equity markets throughout the world are weaker this morning. A prominent credit rating agency stated that downgrades were still possible for Greece and Portugal, even with the new EU aid package in place. Also a series of economic numbers from China for March released overnight showed that Chinese CPI was up 2.8%, Chinese PPI was up 6.8%, Chinese Industrial Production was up 17.8% and Retail Sales were up 18.5% from year-ago levels, all roughly in-line with expectations, but apparently those readings were strong enough to prompt fears of a Chinese rate hike ahead. UK Industrial Production for February was up a much higher than expected 1.9%, while German CPI for March was up an in-line 1.0%. The main US economic number this morning from the US will be February Wholesale Trade, which is generally expected to be up +0.3%. There will also be a 3 Year US Treasury Note auction result posted at mid day today.
GOLD MARKET FUNDAMENTALS: A rekindling of EU debt anxiety seemed to surface again last night, with a number of flight to quality markets like gold, registering action indicative of ongoing debt sector concerns. While some players are suggesting that the Chinese numbers overnight were capable of prompting a Chinese rate hike, those numbers on their face could also be considered supportive to metals prices. Surprisingly gold prices come into the US action higher this morning despite a weaker tone in the Indian gold market overnight. Some gold players are hopeful that the gold market will be able to benefit even if calmer financial waters surface ahead, as many economists suggest that the Euro zone stabilization plan could eventually be considered inflationary. However, the flight to quality angle in the gold market appears to have been a dominating focus of the trade recently and therefore the ebb and flow of anxiety is likely to remain a big influence on gold prices. It would appear that the ebb and flow of equity prices is the primary guide on anxiety levels and therefore gold and equities look to maintain an inverse relationship. Comex Gold Stocks were 10.269 million ounces up 29,018 ounces.
SILVER MARKET FUNDAMENTALS: While silver is showing some minor weakness this morning and appears to be diverging with the gold market, there doesn’t appear to be a major negative tilt facing physical commodity markets this morning. Certainly silver and other physical commodity markets are seeing some spillover weakness from the weaker global equity market action and perhaps because of lingering EU Debt fears. The market did see news of increased physical silver production from a key Canadian silver producer overnight, but minor changes in physical supply haven’t been given that much consideration lately. It is also likely that noted weakness in platinum and copper prices this morning have served to undermine silver prices. From the weak initial action in silver prices this morning, the trade seems to be suggesting that silver is still being viewed as a physical commodity, instead of a flight to quality instrument. Comex Silver Stocks were 116.548 million ounces down 196,140 ounces.
PLATINUM: The platinum market is logically under some pressure this morning, as macro economic optimism is missing today. However, the platinum charts appear to be giving off the impression that up trend channel support just under the market at $1,673 might be solid. However, the platinum market looks to be tightly correlated with the direction of global equity markets and that could mean some initial weakness this morning. On the other hand, in the event that the July platinum market manages to regain the $1,693.50 level, that could be a sign that the bulls have regained control over the market. In order for the bull camp to regain control might require a June S&P trade back above the 1150 level.
Tags: Copper, Gold, Metals, Platinum, Silver
About Dave Hightower