gold has resistance at 274 obviously... interesting few days
COMMENT: The gold is called to open .50 better. In yesterday's session the
June gold was .90 lower at 269.50 with a range of 270.90 to 268.50. The
volume was 38,000 futures and 14,000 options. The dollar was stronger
against the Euro while the Aussie was about steady. One month lease rates
have been steady. The mining accident at the Gold Fields Beatrix mine in
South Africa in South Africa is being investigated and the mine is not
producing now. The Bank of England will auction on May 15 20 tonnes of gold.
Gold Fields announced that in first quarter 2001 gold output was 889,000
ounces compared to 941,000 ounces a year ago. Cash costs were $192 and the
gold price realized was $264. The rally in the gold on Wednesday is being
attributed possibly to removal of a hedge position by Australia's Centaur
Mining & Exploration which is in receivership. The silver is called 1
better. Yesterday the July was 6.5 lower at 435.00 with volume of 7,500
futures and 3,000 options. The silver has been trading in line with the
gold. The May silver is in delivery and there were 100 notices yesterday to
take the total to 6,350 and the open interest is 142. The platinum was 4.2
lower basis July at 607.50. Volume was 499. There was no news. The June
palladium was 13.40 lower at 660.60 with volume 26.
Yesterday, one press report linked recent trade buying in gold futures to
jitters about overhedging by failed Australian producer Centaur Mining and
Exploration which entered receivership in March. The February/March rally
failed near $275 basis the June futures. The market will focus on the level
of market liquidity in light of prices in around $270. The next Bank of
England auction for 20 tonnes of gold is on May 15.
After the close on Friday the CFTC reported that the non-commercial net
short position for COMEX gold had dropped to 27,970 contracts as of May 1
compared with a net short position of 35,011 contracts as of April 24. On
April 10 this position was up to a net short 58,133 contracts. Taiwan's gold
imports for the first four months of this year of 28.7 tonnes were 9% below
the same year ago period. Gold imports by Turkey for the same period were
reported today at 21,225 kg, compared with 66,575 kg for the same year ago
period. This sharp drop reflects recessionary economic conditions and the
financial crisis that broke out in February. We still look for upside to be
capped below the $280 level reflected ample supply from central banks and
weak investor demand.
Last week, Mexican mining group Industrias Penoles the world's largest
silver producer reported that in the first quarter of 2001 silver production
was 578,481 kilograms which was up 5.4% from a year earlier. The CFTC report
on Friday for silver showed the commercial position net short 13,311
contracts while non-commercials were net long 4,103 lots. We doubt that a
sustained uptrend in silver prices can be maintained, due to potential
overhead supply from China, India and Mexico. However, from the low-$4.00
area, downside potential appears limited, based on the possibility of
another supply deficit situation in 2001 (which would be the twelfth
consecutive deficit year). If U.S. economic growth prospects improve, then
the nearby silver futures should remain above this year's low of $4.27,
which also stands as the 42-month low. |
