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OUTSIDE MARKET DEVELOPMENTS: Equity markets both in Asia and Europe have been higher this morning, which has led to US stock indices posting sharp early gains during overnight trading. While off of its lows, the Dollar has been weaker against most major currencies during overnight trading but has gained versus the Yen. Over the weekend, the People’s Bank of China announced that the Chinese currency, the Yuan, would be allowed more flexibility in valuation and they also removed a 23-month long peg against the Dollar. Although officials continued to stress that change would be gradual, the Yuan has made both its largest one-day rise and highest close in 5 years today. An internal document from BP indicates a worst-case scenario that the Gulf oil spill could be leaking 100,000 barrels per day. The European Central Bank called for EU nations to have tougher budget rules and allow for external monitoring. There are no major US economic numbers scheduled for release today.
GOLD MARKET FUNDAMENTALS: The bull camp has to be somewhat happy with the initial action in gold today, as gold has held together somewhat in the face of developments that could have sparked an aggressive liquidation in gold prices. Apparently the Chinese indicated they would allow for a more flexible currency and that in turn has seemingly dampened interest in flight to quality instruments. With gold in the US action managing to waffle around both sides of unchanged in the early action today, it almost seems as if broad based interest in physical commodities is in some way providing minimal support to gold prices. It is also possible that some analysts will suggest that China could buy more gold with a stronger currency and it is also possible that some economists will see the Chinese news as an export of Chinese growth to the rest of the world. The gold market could also have been pressured this morning by talk that Saudi gold reserves were double what the trade had previously been factoring. However, the bull camp might try to shape that news into a positive by suggesting that many countries might be poised to hold more gold in the wake of the historical financial uncertainty facing the markets. Comex Gold Stocks were 10.795 million ounces down 431 ounces. The Commitments of Traders Futures and Options report as of June 15th for Gold showed Non-Commercial traders were net long 265,983 contracts, an increase of 2,515 contracts. The Commercial traders were net short 316,452 contracts, an increase of 5,349 contracts. The Non-reportable traders were net long 50,468 contracts, an increase of 2,833 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 316,451 contracts. This represents an increase of 5,348 contracts in the net long position held by these traders.
SILVER MARKET FUNDAMENTALS: The silver market has apparently found support from its physical commodity roots this morning, as the apparent downtick in safe haven sentiment has not undermined silver prices. In fact, silver prices are clearly outperforming gold this morning, as silver seems to be tracking with industrial metals and the global equity markets instead of gold and the US Treasury markets. After seeing a flight to quality track at times last week, the upside extension in silver prices this morning suggests that this market is able to rally off a number of different themes. Exchange Silver Stocks at the end of last week were pegged at 117.695 million ounces down 600,295 ounces. Silver stocks have increased in 13 of the last 20 days. The Commitments of Traders Futures and Options report as of June 15th for Silver showed Non-Commercial traders were net long 40,647 contracts, an increase of 3,368 contracts. The Commercial traders were net short 57,664 contracts, an increase of 2,335 contracts. The Non-reportable traders were net long 17,017 contracts, a decrease of 1,033 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 57,664 contracts. This represents an increase of 2,335 contracts in the net long position held by these traders.
PLATINUM: Like a number of physical commodity markets platinum is clearly being lifted by the Chinese statements overnight. However, in looking at the platinum action on the charts this morning, it would seem like platinum is skeptical of the bullish attitude. In fact, July platinum made a distinct gap up move initially but has given back all of the early gains. We can’t rule out an attempt to rally today, but we think that July platinum is a sell above the $1,600.00 level. The Commitments of Traders Futures and Options report as of June 15th for Platinum showed Non-Commercial traders were net long 15,841 contracts, an increase of 329 contracts. The Commercial traders were net short 18,875 contracts, an increase of 546 contracts. The Non-reportable traders were net long 3,034 contracts, an increase of 217 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 18,875 contracts. This represents an increase of 546 contracts in the net long position held by these traders.
Metals Market Commentary – 2010.06.21
by Dave Hightower on June 21, 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 both in Asia and Europe have been higher this morning, which has led to US stock indices posting sharp early gains during overnight trading. While off of its lows, the Dollar has been weaker against most major currencies during overnight trading but has gained versus the Yen. Over the weekend, the People’s Bank of China announced that the Chinese currency, the Yuan, would be allowed more flexibility in valuation and they also removed a 23-month long peg against the Dollar. Although officials continued to stress that change would be gradual, the Yuan has made both its largest one-day rise and highest close in 5 years today. An internal document from BP indicates a worst-case scenario that the Gulf oil spill could be leaking 100,000 barrels per day. The European Central Bank called for EU nations to have tougher budget rules and allow for external monitoring. There are no major US economic numbers scheduled for release today.
GOLD MARKET FUNDAMENTALS: The bull camp has to be somewhat happy with the initial action in gold today, as gold has held together somewhat in the face of developments that could have sparked an aggressive liquidation in gold prices. Apparently the Chinese indicated they would allow for a more flexible currency and that in turn has seemingly dampened interest in flight to quality instruments. With gold in the US action managing to waffle around both sides of unchanged in the early action today, it almost seems as if broad based interest in physical commodities is in some way providing minimal support to gold prices. It is also possible that some analysts will suggest that China could buy more gold with a stronger currency and it is also possible that some economists will see the Chinese news as an export of Chinese growth to the rest of the world. The gold market could also have been pressured this morning by talk that Saudi gold reserves were double what the trade had previously been factoring. However, the bull camp might try to shape that news into a positive by suggesting that many countries might be poised to hold more gold in the wake of the historical financial uncertainty facing the markets. Comex Gold Stocks were 10.795 million ounces down 431 ounces. The Commitments of Traders Futures and Options report as of June 15th for Gold showed Non-Commercial traders were net long 265,983 contracts, an increase of 2,515 contracts. The Commercial traders were net short 316,452 contracts, an increase of 5,349 contracts. The Non-reportable traders were net long 50,468 contracts, an increase of 2,833 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 316,451 contracts. This represents an increase of 5,348 contracts in the net long position held by these traders.
SILVER MARKET FUNDAMENTALS: The silver market has apparently found support from its physical commodity roots this morning, as the apparent downtick in safe haven sentiment has not undermined silver prices. In fact, silver prices are clearly outperforming gold this morning, as silver seems to be tracking with industrial metals and the global equity markets instead of gold and the US Treasury markets. After seeing a flight to quality track at times last week, the upside extension in silver prices this morning suggests that this market is able to rally off a number of different themes. Exchange Silver Stocks at the end of last week were pegged at 117.695 million ounces down 600,295 ounces. Silver stocks have increased in 13 of the last 20 days. The Commitments of Traders Futures and Options report as of June 15th for Silver showed Non-Commercial traders were net long 40,647 contracts, an increase of 3,368 contracts. The Commercial traders were net short 57,664 contracts, an increase of 2,335 contracts. The Non-reportable traders were net long 17,017 contracts, a decrease of 1,033 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 57,664 contracts. This represents an increase of 2,335 contracts in the net long position held by these traders.
PLATINUM: Like a number of physical commodity markets platinum is clearly being lifted by the Chinese statements overnight. However, in looking at the platinum action on the charts this morning, it would seem like platinum is skeptical of the bullish attitude. In fact, July platinum made a distinct gap up move initially but has given back all of the early gains. We can’t rule out an attempt to rally today, but we think that July platinum is a sell above the $1,600.00 level. The Commitments of Traders Futures and Options report as of June 15th for Platinum showed Non-Commercial traders were net long 15,841 contracts, an increase of 329 contracts. The Commercial traders were net short 18,875 contracts, an increase of 546 contracts. The Non-reportable traders were net long 3,034 contracts, an increase of 217 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 18,875 contracts. This represents an increase of 546 contracts in the net long position held by these traders.
Tags: Gold, Metals, Platinum, Silver
About Dave Hightower