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OUTSIDE MARKET DEVELOPMENTS: Equity markets in Asia and Europe have moved lower during overnight trading, which in turn put US equity indices under pressure going into the opening. The Dollar is sharply higher against the European currencies, but has lost ground versus the Yen. BP announced that their “top kill” method was unable to stop the large oil leak in the Gulf of Mexico. The Chinese official Purchasing Managers Index came in at 53.9, in line with expectations but that was a fall of 1.7 from the April figure. The Chinese Premier warned that Euro debt problems could threaten global economic growth, but also suggested that Chinese growth remains on track. The European Central Bank warned of a second wave of bank losses overnight, as well as announcing an increase of Euro Zone bond purchases. Euro Zone Unemployment was 10.1% during March, in line with expectations. Canadian GDP was up 6.1% during the first quarter, which was stronger than expected. US economic numbers this morning include March Construction Spending and the April ISM Index, both released at 9:00 AM.
GOLD MARKET FUNDAMENTALS: Somewhat surprisingly the gold market this morning is benefiting from revived Euro zone debt contagion fears and that seems to have pulled the market out of its recent physical commodity market focus. Apparently the markets keyed in on ideas that Euro zone banks were facing another wave of potential loan losses off the financial crisis and that in turn fostered an initial wave of flight to quality buying of gold overnight. Somewhat surprisingly the gold market also seemed to benefit from news of a decline in a Chinese purchasing Managers index overnight and that also seemed to break down the gold markets recent link to its physical commodity market standing. With the focus seemingly centered on financial or flight to quality issues this morning, it is unlikely that gold prices this morning are being directly lifted by news that Russian gold production, in the first four months of 2010, almost dropped by 8% over the prior year’s figures. Comex Gold Stocks were 10.737 million ounces up 643 ounces. The Commitments of Traders Futures and Options report as of May 25th for Gold showed Non-Commercial traders were net long 253,330 contracts, a decrease of 21,439 contracts. The Commercial traders were net short 296,099 contracts, a decrease of 28,198 contracts. The Non-reportable traders were net long 42,769 contracts, a decrease of 6,760 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 296,099 contracts. This represents a decrease of 28,199 contracts in the net long position held by these traders.
SILVER MARKET FUNDAMENTALS: With some negative divergence being seen this morning between silver and gold prices, one could get the impression that silver is set to act like a physical commodity market facing a renewed threat of global slowing off the travails in the Euro zone. News that the Chinese economy might be slowing down a touch, would seem to catch industrial commodities like silver in a vulnerable condition this morning, especially in the face of a rather significant rise in the US Dollar. Just to add insult to injury, the bull camp in silver also saw evidence of rising silver production from Mexico, as March 2010 Mexican silver output increased sharply over year ago levels. Tempering some of the potential negative impact from the recent silver production news, were somewhat favorable demand forecasts from Gold Fields Mineral Services. Comex Silver Stocks were 119.061 million ounces up 540,062 ounces. Comex Silver Stocks are at the highest levels since 09/18/2009. The Commitments of Traders Futures and Options report as of May 25th for Silver showed Non-Commercial traders were net long 36,398 contracts, a decrease of 8,863 contracts. The Commercial traders were net short 54,011 contracts, a decrease of 8,590 contracts. The Non-reportable traders were net long 17,614 contracts, an increase of 274 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 54,012 contracts. This represents a decrease of 8,589 contracts in the net long position held by these traders.
PLATINUM: Like silver, the platinum market forged a higher high on the charts this morning before reversing course. With the markets fearful of renewed slowing off the Euro zone debt travails and the trade also presented with talk that the Chinese economy might be slowing, the path of least resistance in platinum prices is probably set to point downward. Critical support is seen in the July contract is seen down at the $1,532 level, but a return to $1,500 can’t be discounted in the current environment. The Commitments of Traders Futures and Options report as of May 25th for Platinum showed Non-Commercial traders were net long 15,019 contracts, a decrease of 8,039 contracts. The Commercial traders were net short 18,107 contracts, a decrease of 8,824 contracts. The Non-reportable traders were net long 3,087 contracts, a decrease of 786 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 18,106 contracts. This represents a decrease of 8,825 contracts in the net long position held by these traders.
Metals Market Commentary – 2010.06.01
by Dave Hightower on June 1, 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: Equity markets in Asia and Europe have moved lower during overnight trading, which in turn put US equity indices under pressure going into the opening. The Dollar is sharply higher against the European currencies, but has lost ground versus the Yen. BP announced that their “top kill” method was unable to stop the large oil leak in the Gulf of Mexico. The Chinese official Purchasing Managers Index came in at 53.9, in line with expectations but that was a fall of 1.7 from the April figure. The Chinese Premier warned that Euro debt problems could threaten global economic growth, but also suggested that Chinese growth remains on track. The European Central Bank warned of a second wave of bank losses overnight, as well as announcing an increase of Euro Zone bond purchases. Euro Zone Unemployment was 10.1% during March, in line with expectations. Canadian GDP was up 6.1% during the first quarter, which was stronger than expected. US economic numbers this morning include March Construction Spending and the April ISM Index, both released at 9:00 AM.
GOLD MARKET FUNDAMENTALS: Somewhat surprisingly the gold market this morning is benefiting from revived Euro zone debt contagion fears and that seems to have pulled the market out of its recent physical commodity market focus. Apparently the markets keyed in on ideas that Euro zone banks were facing another wave of potential loan losses off the financial crisis and that in turn fostered an initial wave of flight to quality buying of gold overnight. Somewhat surprisingly the gold market also seemed to benefit from news of a decline in a Chinese purchasing Managers index overnight and that also seemed to break down the gold markets recent link to its physical commodity market standing. With the focus seemingly centered on financial or flight to quality issues this morning, it is unlikely that gold prices this morning are being directly lifted by news that Russian gold production, in the first four months of 2010, almost dropped by 8% over the prior year’s figures. Comex Gold Stocks were 10.737 million ounces up 643 ounces. The Commitments of Traders Futures and Options report as of May 25th for Gold showed Non-Commercial traders were net long 253,330 contracts, a decrease of 21,439 contracts. The Commercial traders were net short 296,099 contracts, a decrease of 28,198 contracts. The Non-reportable traders were net long 42,769 contracts, a decrease of 6,760 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 296,099 contracts. This represents a decrease of 28,199 contracts in the net long position held by these traders.
SILVER MARKET FUNDAMENTALS: With some negative divergence being seen this morning between silver and gold prices, one could get the impression that silver is set to act like a physical commodity market facing a renewed threat of global slowing off the travails in the Euro zone. News that the Chinese economy might be slowing down a touch, would seem to catch industrial commodities like silver in a vulnerable condition this morning, especially in the face of a rather significant rise in the US Dollar. Just to add insult to injury, the bull camp in silver also saw evidence of rising silver production from Mexico, as March 2010 Mexican silver output increased sharply over year ago levels. Tempering some of the potential negative impact from the recent silver production news, were somewhat favorable demand forecasts from Gold Fields Mineral Services. Comex Silver Stocks were 119.061 million ounces up 540,062 ounces. Comex Silver Stocks are at the highest levels since 09/18/2009. The Commitments of Traders Futures and Options report as of May 25th for Silver showed Non-Commercial traders were net long 36,398 contracts, a decrease of 8,863 contracts. The Commercial traders were net short 54,011 contracts, a decrease of 8,590 contracts. The Non-reportable traders were net long 17,614 contracts, an increase of 274 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 54,012 contracts. This represents a decrease of 8,589 contracts in the net long position held by these traders.
PLATINUM: Like silver, the platinum market forged a higher high on the charts this morning before reversing course. With the markets fearful of renewed slowing off the Euro zone debt travails and the trade also presented with talk that the Chinese economy might be slowing, the path of least resistance in platinum prices is probably set to point downward. Critical support is seen in the July contract is seen down at the $1,532 level, but a return to $1,500 can’t be discounted in the current environment. The Commitments of Traders Futures and Options report as of May 25th for Platinum showed Non-Commercial traders were net long 15,019 contracts, a decrease of 8,039 contracts. The Commercial traders were net short 18,107 contracts, a decrease of 8,824 contracts. The Non-reportable traders were net long 3,087 contracts, a decrease of 786 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 18,106 contracts. This represents a decrease of 8,825 contracts in the net long position held by these traders.
Tags: Gold, Metals, Platinum, Silver
About Dave Hightower