Nell Sloane:
DAILY US METALS COMMENTARY 1/19/2005
METALS: OVERNIGHT CHANGE to 3:45 AM: London Gold Fix $424.10 +$1.55 LME COPPER STOCKS 43,525 metric tons Unchanged COMEX Gold stocks 5.934 ml -16,702 oz COMEX SILVER stocks 102.6 ml -307,011 oz
OVERNIGHT ACTION: Mixed trade in Asia with $ action slightly more beneficial today.
GOLD: Despite the fact that Chinese gold was slightly weaker overnight, we suspect that support under gold will be a little more prevalent this morning, as the Dollar is showing some signs of weakness. However, if the March Dollar Index were to fall below 83.00, that could psychologically inspire even more gold buyers to come back into the market, after the recent fund liquidation. The April gold contract continues to coil in a $420 to $430 range but until the pattern of lower highs is violated with a rise back above $430.5, we have to give the bear camp a slight edge. With the US CPI report out this morning and the PPI recently showing a contraction, we suspect that gold will see a minor ripple of selling in the wake of the CPI report. While the initial claims report is pulled forward today, due to the Inauguration, we doubt that the report will impact the gold market significantly. We suspect that gold is in much better short term technical condition than it was to start the month, especially when one considers that April gold fell nearly $30 an ounce in the January slide. However, from the fundamental front the gold market still doesn't seem to have a conclusive theme besides the hope for more weakness in the Dollar. In the short term, one can't rule out a waffling of prices between $423.2 and $430.
SILVER: At times the silver market appears to be divorcing itself from the daily gold market action and could be attempting to tie its fate to the industrial metals. With copper and zinc rising sharply overnight and favorable Chinese dialogue surfacing again, the best hope for the bull camp in silver is to play up the physical demand link. However, we would be a little surprised to see March silver manage a rise above $6.775, but we concede that the path of least is now pointing up but we are not sure that momentum will be that impressive.
METALS TECHNICAL OUTLOOK 1/18/05
SILVER (MAR):Stochastics are at mid-range but trending higher, which should reinforce a move higher if resistance levels are taken out. The market back below the 18-day moving average suggests the longer-term trend could be turning down. The market has a slightly positive tilt with the close over the swing pivot. The near-term upside target is at 673.5. The next area of resistance is around 670.0 and 673.5, while 1st support hits today at 661.1 and below there at 655.5.
GOLD (FEB): Daily stochastics are showing positive momentum from oversold levels, which should reinforce a move higher if near-term resistance is taken out. The close below the 18-day moving average is an indication the longer-term trend has turned down. The market has a slightly positive tilt with the close over the swing pivot. The next upside objective is 425.7. The next area of resistance is around 424.7 and 425.7, while 1st support hits today at 422.3 and below there at 420.8.
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