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OUTSIDE MARKET DEVELOPMENTS: Apparently the flight to quality angle isn’t the only force capable of lifting gold and silver prices, as a slightly improved macro economic view in China overnight and talk that Euro zone numbers might be capable of bottoming out ahead, could have easily disappointed the flight to quality longs in the precious metals markets. In other words, the metals seemed to have managed to spin the macro economic developments into their favor. However, it is also possible that the metals markets are simply benefiting from expectations of lower rates from the BOE and from other central banks in the coming trading sessions. In the end, seeing the Chinese talk favorably about the influence of their initial stimulus efforts might in turn be reducing global deflationary fears and that in turn is being seen as a positive in the metals trade and in a host of physical commodity markets. In fact, with the industrial metals markets showing ongoing strength and the energy complex even managing some minor gains early this morning, it would seem like the outside market influence on the metals today is initially supportive. However, with the US scheduled to release an ISM Non-manufacturing report this morning a private monthly jobs survey report also due out, a portion of the metals trade has to fret over the prospect of some temporary pressure off the US number flow.
GOLD MARKET FUNDAMENTALS: While the gold market saw signs of falling foreign currency/gold reserves from Kazakhstan overnight and that news seems to mirror the pattern of declines being seen in Russian gold and currency reserves over the last month, a portion of the metals trade continues to assume that the declining reserve numbers are mostly the result of declining currency holdings and not a decline of gold holdings. It is also likely that perpetually supportive dialogue from gold investment fund holdings data is serving to fundamentally underpin gold prices. However, while gold prices are showing gains from the prior close on the charts, residual optimism in global equity markets would seem to be some form of negative influence for the gold market into the opening today. However, the bull camp continues to suggest that burgeoning US debt supply, political infighting on the stimulus package and ongoing evidence of classic slowing leaves the overall uncertainty level high enough to give the bull camp some resolve. In fact, some gold players think the US Non farm payroll report on Friday will keep the anxiety angle in place for the coming three trading sessions.
TODAY’S GUIDANCE IN GOLD: Critical up trend channel support in the April gold contract is seen at $897.5 today, with the next lower support zone seen down at $890.3. In the end, we get the feeling that the gold market is coming into a major junction on the charts, especially since the presence of an upbeat macro economic spin toward the Chinese economy was shaped into a partial positive for gold prices. On the other hand, the flight to quality angle won’t be easily removed from this market. However, we are a little concerned that the public is piling into the ETF instruments (at a very strong rate) as that hints at an overdone potential for gold prices in the near term.
SILVER MARKET FUNDAMENTALS: Like the gold market, the silver trade continues to see upbeat news from the gold and silver “ETF holdings front”. However, silver exchange stocks did mount a minor rise yesterday afternoon but that potentially undermining news would seem to be more than countervailed by the positive opening tilt this morning. Apparently the market doesn’t seem to be overtly undermined as a result of a sharp increase in silver reserves at Hecla mining, perhaps because a major brokerage firm and a lesser known consulting service have floated positive longer term silver price projections in the overnight action. Like the gold market, the silver market is seeing a number of very up beat price projections and while that can smack of overdone bullish sentiment, persistent new highs in that amount of silver being held in trusts, does seem to justify some of the bullish psychology. With copper prices managing a significant rise over the last 24 hours and the outlook for the Chinese economy seemingly improved, one could even suggest that silver was getting some lift from its industrial commodity component. In short, the bull camp is doing a good job of playing up the positives and discounting the negatives.
TODAY’S GUIDANCE IN SILVER: The upward pattern on the charts seems to indicate that the path of least resistance in the silver market continues to point upward. With a number of pretty aggressive bullish analysts forecasts for silver prices in the coming quarters, one gets the sense that silver is poised for grinding gains on the charts. Up trend channel support in the March silver contract rises to $11.91 today and up to $11.98 on Thursday. First it was flight to quality buying but over the last 24 hours it would seem as if a measure of up beat macro economic sentient has drifted into the buyers equation and that suggests that the silver market has the capacity to shift its bullish argument among various factors.
PLATINUM: The platinum market has under performed the rest of the metals complex this week. In fact, platinum really seems to be out of favor this morning with the least amount of gain being seen in the wake of somewhat favorable macro economic sentiment toward the Chinese economy overnight. However, very discouraging US auto sales readings in the prior session are probably serving as an anchor around the neck of the platinum market. Up trend channel support today in the April contract is seen at $952.6.
