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OUTSIDE MARKET DEVELOPMENTS: Apparently a weaker Dollar is of little interest to the international gold trade overnight, or perhaps the trade sees the prospect of a slight bounce in the equity markets as a sign to continue banking profits. It is also possible that news of a possible start to quantitative easing by the BOE undermined the flight to quality status of the precious metals markets or perhaps the markets are simply anticipating some type of optimism to surface into and through a series of US official testimonies later today. With the US Fed Chairman and the US Treasury Secretary both testifying today and details on the US Bank plan slowly surfacing, it is certainly possible that the safe haven or flight to quality element in gold and silver is being tamped down. However, with a series of potentially weak US Pending Home sales figures and weak US auto sales data due out today, there is also the chance that the gold and silver trade could being seeing some pressure from the fear of too much slowing ahead.
GOLD MARKET FUNDAMENTALS: While the press is playing up the idea that yesterday’s liquidation in gold was partially the result of a spillover impact from margin requirements in the failing stock market, seeing the combined net spec and fund positioning in the gold market rise above 208,000 contracts in the last COT report suggests that the gold market was at least partially overdone internally. With the stock market declines seemingly factoring in the fear of more extended and perhaps severe slowing ahead, it is also possible that weakness in gold yesterday and again this morning is the result of fears of “too much slowing”. In other words, some longs might be liquidating because of renewed deflationary concerns. Despite seeing evidence of another record in gold holdings by a derivative instrument overnight and an initially weaker US Dollar this morning, the gold market seems to have remained out of favor. In fact, Indian buyers also balked at slightly lower gold prices overnight and that would seem to leave the bear camp with an initial edge into the early US action today. Apparently some minor supply side threats overnight are set to be discounted, but that isn’t surprising considering that supply side issues have been given little credence for quite some time.
SILVER MARKET FUNDAMENTALS: Despite some mining concerns at a key Mexican mining facility, the silver market seems to be locked into a tight track with the gold market and with the ebb and flow of the flight to quality angle. In fact, the silver market also doesn’t seem to be interested in what might be a pattern of declining silver exchange stocks. However, like the gold market, the silver market was somewhat overbought in the latest COT positioning reports and therefore a slight recovery in macro economic sentiment, or more accurately a temporary abatement of severe macro economic anxiety seems to be capable of prompting more long liquidation selling in silver. In the end, a fresh new low for the move in the silver market this morning would seem to give the bear camp a slight technical advantage and therefore the bull camp will have to hope that a bit of euphoria into the official testimony today actually serves to provide support to a host of physical commodity markets that have recent been under selling pressure.
PLATINUM: Up trend channel support in the April platinum contract today is seen down at $1,027. Surprisingly, the platinum market seems to have become a flight to quality instrument on days of extreme anxiety, but it would also seem like platinum is also capable of being undermined by fears of slowing and that suggests the market is having trouble maintaining its focus. For today, expect the bears to control and for prices to slide.
