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OUTSIDE MARKET DEVELOPMENTS: Apparently the gold and silver markets were benefited by the events yesterday. Some traders feared a significant letdown in flight to quality buying interest in gold and silver, in the event that the US stimulus plan or the US Treasury plan provided a surge in confidence. However, both efforts from the US government resulted in a thud in the US equity markets and that in turn seemed to whip up flight to quality or safe haven buying in gold, silver and platinum. In looking forward, the US is expected to release a Trade balance reading today that might serve to lift precious metals prices. It is also possible that the US Budget deficit readings to be released later in the session will also be a development that serves to prompt flight to quality psychology. The market will also see a potentially critical US Treasury refunding auction of 10 Year notes and the interest, or lack of interest in that supply flow could be a very important development for the metals markets today. Lastly, the market will also see some confrontation between members of Congress and various US financials sector CEO’s and if that testimony denigrates into mud raking, that could also serve to push more flight to quality buying interest toward the precious metals markets.
GOLD MARKET FUNDAMENTALS: Very lofty upside price projections for gold continued to flow overnight and that in conjunction with recent gains on the charts, would seem to leave the bull camp with a psychological edge. It should be noted that the gold market benefited yesterday from news of strong demand for US 3 year Notes in the refunding auction and therefore the gold market will be watching for news on the second round of auctions around mid session today. With the market also seeing fresh evidence of new record holdings in gold derivatives again overnight, it is clear that the public is still pushing money toward gold and some gold bulls even suggest that more downside action in the US stock market directly ahead could push even more money toward the gold market. While the gold market did see some bearish near term projections for gold prices in the overnight press, it would seem like overall longer term sentiment still generally favors the bull camp into the opening today.
SILVER MARKET FUNDAMENTALS: The silver market continued to forge what appears to be a uniform upward trek on the charts. Clearly silver and gold are deriving a large portion of their buying interest from classic flight to quality arguments and given the complicated nature of the turmoil facing the US economy, it might be difficult for the market to dent the flight to quality theme. With another steep decline in silver exchange warehouse stocks overnight and fresh evidence of expanding holdings in various gold and silver ETF instruments, the bull camp would seem to hold more cards than the bear camp into the opening this morning. Even the US Dollar is weaker this morning and that would seem to round out the outside market forces in the bull’s camp. One thing that should be noted is that silver is getting fewer lofty price predictions than the gold market, but in the near term the silver and platinum markets both seem to be able to draft off the residual strength in the gold market.
PLATINUM: The platinum market has managed another upside thrust overnight and that left the April platinum contract at the highest level on the charts since September 29th. In fact, there is a gap area up at $1,094 and that level could be a near term target. However, the bulls in the platinum market need to be aware that recent gains have been almost exclusively the result of spillover flight to quality action in the gold market.
