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OUTSIDE MARKET DEVELOPMENTS: With the Dollar slightly weaker in the early action today, US equities showing some minor gains into the US action and the US data schedule later this morning largely expected to bring in positive readings this morning, the outside market forces could initially favor the precious metals bulls over the bears. However, with the equity markets off a sharp break in the prior trading session and a US Fed member hinting at pre-emptive rate hike action overnight, the bull camp in gold and silver can hardly afford to see much in the way of disappointment in the scheduled number flow this morning. With the initial G20 statement seemingly focused on leaving easing in place and in turn not mentioning the weakness in the Dollar, one could suggest that the G20 meeting has initially provided the bull camp with some assistance. The bear camp has to be supported by broad based weakness in stocks and commodities in the prior trading session and therefore the direction of equities today might take on more importance, than perhaps the action in the US Dollar.
GOLD MARKET FUNDAMENTALS: While the gold market has seen news of a modest mining strike overnight, the news from the physical supply front hardly looks to trump the intense focus on the direction of the Dollar and the outlook for the global economy. While the trade has mostly discounted the talk from the Fed’s Warsh about the possible need to raise interest rates before inflation becomes apparent, that issue is a troubling development for the bull camp into the action today. However, with the Dollar initially soft and the US equity markets showing some bounce, the outside market forces are not nearly as defeating as they were in the prior trading session. With the December gold contract waffling around just under the $1,000 level this morning, the bear camp might suggest there is some natural resistance hanging over the market early, while the bull camp might point out that December gold to this morning’s early high, was as much as $9 an ounce above the prior session’s lows. At least in the near term, gold looks to ebb and flow mostly off external market developments.
SILVER MARKET FUNDAMENTALS: Unfortunately for the bull camp, the December silver contract managed another new low for the move in the early going today. However, the Dollar is lower and US equities are trying to show some positive action and that could reduce the bear’s confidence somewhat. After a series of rather concerning daily builds in silver exchange stocks earlier this week, silver did see a minor decline in stocks last night but the silver market in general hasn’t viewed physical supply news as a critical element recently. With December silver prices in the early action today remaining below the prior closing value, it would not seem like the weaker Dollar is dominating sentiment early today and therefore it might take a more distinct slide in the Dollar to provide the silver market with a currency benefit. With copper and energies prices also coming off noted declines this week, it is likely that silver is seeing some indirect pressure from the fears of softening industrial demand ahead and that in turn might make the action in the US equity market even more important to the silver trade today. In the end, the silver market looks to keep its focus on external forces, at the expense of classic internal market forces.
PLATINUM: A failure of the even number $1,300 level overnight would seem to leave the bears with a slight technical edge. However, the market recoiled from the sub $1,300 level in the January platinum contract overnight and with the platinum market to the overnight lows, sitting as much as $66 an ounce below the recent highs one could suggest that the correction is getting close to running its course. A normal retracement off the September rally was also tested and rejected overnight at the $1,307.4 level and that could also be a development that gives the bull camp some added confidence.
