The President of South Korea has called for talks to end the conflict on the Korean peninsula. Euro zone money supply during November grew 1.9% year-on-year, higher than forecasts. There will be no US economic numbers this morning, as a private survey of mortgage applications was postponed until next week due to holiday closures. The Treasury will also auction 7-year notes this morning, with the results announced at 12:00 PM.
GOLD MARKET FUNDAMENTALS :
Positive Indian gold price action overnight hasn't resulted in a positive start to the early US Wednesday trade in gold. However, the gold market seems to have caught some supportive press coverage in the wake of another rise above the $1,400 price mark yesterday. While the Dollar is slightly weaker this morning and equities are showing some positive early action, commodities in general don't seem to pointing to a distinct wave of gains in the early action.
However, gold continues to benefit from a series of 2011 bullish price forecasts, but at times this morning gold was seemingly underperforming silver prices. Seeing the Chinese move with additional tightening measures overnight could be responsible for some of the initial weakness in gold prices this morning. It is also possible that some gold traders backed away from the market overnight because of concerns of an Indian gold import duty increase.
However, ongoing inflation expectations are still present especially with German and euro zone CPI readings overnight showing noted gains. Traders should be on the look out for a reaction in gold prices around the last US Treasury auction of 2010 at mid session. Comex Gold Stocks were 11.629 million ounces down 23,468 ounces.
Stocks have declined 12 of the last 20 days. While gold is showing some initial weakness and the market might be a touch overbought, it is difficult to take control completely away from the bull camp. However, given the lack of scheduled data from the US today, the tightening move from the Chinese and the prospect of a poor US Treasury auction, it is possible that gold could see some back and fill type action. However, we think that February gold will see a measure of solid support around the $1,400 level today and even more support again down at the $1,395 level. Very critical up trend channel or buying support, off the July through present rally, is seen down at $1,376 today, but that level rises to $1,378 on Thursday.
SILVER MARKET FUNDAMENTALS :
The silver market seems to be outperforming the gold market in the early action today. Silver and copper both appear to be getting support from favorable 2011 price predictions, as a number of analysts continue to tout them as cheaper alternatives to gold. The silver market is probably garnering some residual support from news yesterday, of a noted decline in silver production from Peru, but the focus of the silver trade recently has centered on investment demand as opposed to the prospect of tightening supply.
Silver prices were firm in India overnight and that seems to have kept US silver prices above the prior session's closing level. Like gold, silver is probably a little undermined by the news of additional Chinese tightening moves, but that impact is largely being offset early today by weakness in the Dollar and what appears to be a positive start in the US equity markets. Comex Silver Stocks were 104.486 million ounces down 623,301 ounces. Silver stocks have declined in 12 of the last 20 days.
The bulls have the edge but we are not sure if the positive action in the equity markets will translate into another range up move in silver today. The path of least resistance is pointing upward, but the market might lack the volume to launch prices back to the contract highs today. However, one gets the sense that long term bullishness toward silver and other physical commodities is set to keep a firm bid under silver prices, as they continue to play catch up to the historic rally in gold prices. Close-in support is pegged at $30.30 and there might be little in the way of resistance until the $30.50 level.
METALS TECHNICAL OUTLOOK :
Note: Technical commentary is based solely on statistical indicators and does not necessarily correspond to any fundamental analysis that may appear elsewhere in this report.
COMEX GOLD (FEB) 12/29/2010 : The daily stochastics have crossed over up which is a bullish indication. Momentum studies are trending higher from mid-range, which should support a move higher if resistance levelsare penetrated. The intermediate trend could be turning up with the close back above the 18-day moving average. There could be more upside follow through since the market closed above the 2nd swing resistance. The near- term upside target is at 1425.0. The next area of resistance is around 1418.2 and 1425.0, while 1st support hits today at 1393.8 and below there at 1376.3.
COMEX SILVER (MAR) 12/29/2010:
A bullish signal was given with an upside crossover of the daily stochastics. Momentum studies are trending higher from mid-range, which should support a move higher if resistance levels are penetrated. The market's close above the 9-day moving average suggests the short-term trend remains positive. The market has a bullish tilt coming into today's trade with the close above the 2nd swing resistance. The next upside objective is 3115.2. The next area of resistance is around 3084.5 and 3115.2, while 1st support hits today at 2975.5 and below there at 2897.3. For the latest updates PRESS CTR + D or visit Stock Market news Today
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