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OUTSIDE MARKET DEVELOPMENTS: With the Dollar forging a distinct downside breakout on the charts this morning, equities showing moderate strength overnight and a number of physical commodities posting early gains, the outside market environment seems to be favoring the bull camp in the precious metals markets. Apparently the trade saw a lack of G20 focus on the weak US Dollar in their latest meeting as a sign that the Dollar might be allowed to fall even further. Therefore, the currency market influence on gold and silver prices this morning seems to be sitting definitively in the bull’s court. It is also possible that news of two rather large Asian IPO’s overnight and definitive upside gains in global equity markets are serving to gloss over the disappointing US Non Farm payroll readings that were seen at the end of last week. While the US economic report slate this week looks to be somewhat thin, the trade will be presented with a series of US debt auctions, with a somewhat large $40 billion sale of 3 Year notes seen later in the Monday session. In fact, this week’s auction tally presents the trade with yet another record quarterly auction of US debt and to some in the gold trade that is a significant inflationary development.
GOLD MARKET FUNDAMENTALS: The gold bulls overnight are pointing to the lack of G20 discussion on the slide in the Dollar as the primary driving force in the gold market this morning. With the Dollar falling to a fresh new low for the move in the early going today, it is difficult to discount the influence of the currency market action on the gold market. It would also seem like there is an interest in “risk” this morning in global equity markets and that would seem to keep the market from directing its attention back to the ongoing trouble in the US employment sector. With Indian gold prices very firm overnight and the Press carrying stories about the Russian central bank possibly buying gold from the Russian state depository, there would seem to be mostly bullish classic fundamental news flow facing the US Monday morning gold trade. While the trade continues to rehash a story suggesting that Chinese central bank gold buying interest might be put off, the trade continues to benefit from the news last week of Indian central bank gold buying interest. It is possible that a mid day US auction result will provide a volatility event in the gold market, but with the US economic report slate today mostly devoid of 1st or 2nd tier readings, the bear camp might not be able to rekindle the fear of slowing easily.
SILVER MARKET FUNDAMENTALS: Clearly the silver market is being lifted by outside market action in the early Monday morning trade. With a fresh downside breakout in the Dollar and a fresh upside breakout in the gold market, the silver market is apparently seeing positive guidance from a number of different fronts. In fact, the bull camp in silver is probably seeing some support from the upside action in global equity prices, as that action seems to countervail or gloss over the slack US employment readings that were seen at the end of last week. However, with a host of physical commodity markets also making impressive early upward bids this morning, it would seem like silver is even seeing support from its industrial commodity market background. Like gold, a weaker Dollar, higher equities and rising energy prices would seem to give the silver bulls a number of themes to support their cause this morning. While some players think the slack US payrolls from last week are destined to hold back the industrial commodities, December silver has nonetheless managed to rise by roughly 30 cents since the US non farm payroll release!
PLATINUM: The platinum market is catching a lift from the gold market and from the ongoing weakness in the Dollar. While the November 3rd Commitment of Traders with Options report for Platinum showed the Non-commercial position to be net long 19,304 contracts, with the Non-reportable position net long 4,030 contracts, that made the “combined” spec and fund position net long 23,334 contracts as of early last week. In other words, the platinum spec long is building but in the near term, the threat of a technically overbought condition is unlikely to rob the platinum market of more gains. Critical support moves up to $1,356, with an initial upside target in the January platinum contract seen at $1,372.
