Metals Review from Erik Gebhard at ALTAVEST: The BOE gold auction did not meet the expectations of the bulls, as about 800,000 ounces went for 293.5 per ounce. The NY gold market opened and went on to suffer a set back today, with gold was down over $8 on the close to end the session at 293.5. The COT report from Monday revealed an over abundance of net long specs, or weak hands, in the gold market, and we received confirmation of that today as prices were weak. The bearish results from today's auction also pressured silver a bit, but considering how much gold dropped, silver did hold up quite well, trading lower by only at 4-cents to close at 520.8. The white metals were quiet and mixed, with palladium down $5.4 at 396 and platinum up $.80 at 407.6. There is still growing consternation regarding future Russian exports of the white metals. It is obvious that these markets take all Russian market related news events with several grains of salt, as reports out of ! Russia have historically been unreliable, at best. The bull trend is still very much intact though regarding the PGM. March copper was a bit stronger as LME zinc and aluminum prices were strong, influencing copper to settle at 8140, up 70 points. February Gold - O 295 H 295.9 L 292.4 C 293.5 Chg. -8.3
Gold closed near session lows as the BOE auction did not meet the high expectations of the bulls. The auction was 2 times oversubscribed with 800,000 ounces going for 293.5. Some were obviously expecting better numbers and a higher offering price, therefore the drop in gold prices today. As I suggested last week, bulls would have been wise not to get too excited last week, so hopefully you didn't get caught buying the highs last week. The COT report from last week showed a net long spec position of over 22,000 contracts, and as suggested, it seems the market was in weak h! ands. Lease rates remain low and are getting lower, indicating ample supply. Energy prices were clobbered today, and that didn't help gold bulls. The triangle was broken to the downside today as the sharp move that we were looking for occurred. The market is still range bound, and may have room to drop a bit more. There is support at 291, but a gap in the 290 area still exists. Those who bought in the lower 290's should not risk below 291.8 on a closing basis. An option straddle position as suggested last week would be doing nicely now.
March Silver - O 523 H 525 L 520 C 520.8 Chg. -4.5
The silver market was on a leash today, and that leash was attached to gold. It is also interesting to note that even though silver was lower, prices held up surprisingly well considering the magnitude of the gold decline. Lease rates are still a bit strong, and because prices didn't totally collapse in conjunction with gold, that may suggest there is some fundamental as well as techni! cal support in this market. Last weeks as gold rallied silver hit 3.5 week highs, but if gold stays sluggish silver may also have a more difficult time attracting new buying interest. Moving averages are still headed higher, but barely. Technical indicators are now a bit more neutral. The close over 525 last week did not get the bulls excited today as I had thought. If you are long from the 510-15 area, don't risk below your entry point...protect your profits. Bulls may still consider buying calls or a mini contract at this point because you will have lots of staying power. The nearby technical picture is sloppy, and I am now altering my stance to neutral. Nearby resistance is now the 540 area, with support at 520.
March Copper - O 8170 H 8190 L 8090 C 8140 Chg. +.70
Copper was a bit stronger today as the strength in the LME zinc and aluminum markets may also be helping to support copper. However, action is still relatively sluggish, but copper still looks poised ! to rally a bit more now that the holiday is behind us. Without a lot of fresh copper news to report, I am forced to mention one-week old news. The rate hike a couple of weeks ago could have pushed copper lower as it could have been seen as detrimental to the new housing market...but it wasn't. The strike at Chile's Iquique copper port a couple of weeks ago came and went without any effect on the markets. Even with the pullback the last few days, the overall trend is still higher, but choppy, and likely to continue so in this seasonally slow period. A close below trend support near 7900 is what is needed to allow the bears to charge. The market looks poised to move higher in the longer run, and remember that ascending bullish formation I mentioned, well it's playing out nicely for the bulls.
March Palladium - O 393.5 H 399.8 L 393 C 396 Chg. -5.4 January Platinum - O 405.5 H 409.5 L 404.5 C 407.6 Chg. +.80
The white metals were quiet and mixed in the wake of the gold a! uction results. The market continues to ruminate regarding the possibility of Russian exports resuming. Russian export legislation has been at a stalemate, but last week the Duma voted to take steps and end the export stalemate. The Johnson Matthey report last week predicted that Russian exports of platinum would fall to 800,000 ounces compared to 1.3 million last year. In any case, the markets are still tight and the uptrends are intact. I had mentioned that the platinum settlement above 400 on Friday was encouraging for the bulls, and so far so good. Aggressive traders who bought on this recent weakness are in good shape. However, the chart is showing a bearish head and shoulders formation, so bulls beware! The palladium chart is showing a triangle, so look for a big break to either side soon. |
