Morning Gold Fix – March 3, 2011
FMX | Connect – www.fmxconnect.com - (Reported 3/3/2011)
The following is a summary of yesterday’s US gold activity and a recap of Asia & European markets overnight. It includes our proprietary options analytics and news stories from industry professionals.
Summary
April Gold settled at $1437.70 per troy ounce on Wednesday, a gain of $6.50 for the day. Volatility and call skew continued to perform as the market reached all-time highs.
April gold was down $10.5 to $1427.2 per 100 troy ounces as of 8:10 am EST this morning. The March U.S. dollar index was up 0.036 to $76.725. April platinum was down $12.5 to $1846.8 per 50 troy ounces. May silver was up 34.0 cents to $34.495.
Market Commentary
Options activity was disappointing today. There was plenty of it but it was focused in April. Not much fresh interest came into the markets despite gold sitting on all-time highs. We might be a little toppy here. It is interesting to notice that at the moment the stock market opened and GLD began trading comex had a $2 pop in the futures, probably from a retail order bottleneck arbitraged onto the floor. These signs give us pause before remaining too bullish. Skew shifted significantly for the calls again today but that is not necessarily bullish. That just means volatility will expand if we go higher and contract if we go lower. As we sit here and look at the market, once again the futures sold off hard after the comex close only to rebound on buying (April gold dropped as low as 1431 post-close but is now back to 1435). We can’t help but think this market is being spoofed lower so a long can add to his position at more desirable levels.
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Technical Overview
APR GOLD
The market is bullish, showing a preliminary breakout over the previous 143410 high. A close over 143410 could boost rallies to 144650 and holds potential to reach for 1490. If trade struggles against the previous 143410 high, then be on guard for a slip into flagging congestion around 1420-1415. However, only a close under 140990* alerts for a failed breakout and turn into a corrective retracement to 138790*.
MAY SILVER
The market is bullish, triggering a breakout into new highs and alerting for an aggressive bull phase. Look for an initial bull extension to 3542-3600 as well as chances for a larger blow off towards 3800. If trade has trouble holding over 3397, then be alert for a flip into a few flagging consolidation days, but a close under 32955* alerts for a failed breakout and turn to retracements under 3200-.
MAY COPPER
The market is trying to return to the prevailing bull trend. However, yesterday’s action again stalled against key 44995* resistance. A close over 44995* is needed to signal a bull turn and drive a secondary bull wave to recent swing highs. Further rejections from 44995* suggest a slip back to corrections. A close under 43510* will drive a selloff against last week’s low.
In the News
Bloomberg (Reported 3/3/2011)
Gold declined in London after reports that Venezuela offered to mediate a resolution to the crisis in Libya prompted some investors to sell the metal following its rally to a record. Gold reached a record $1,440.32 an ounce yesterday. Libya’s Muammar Qaddafi and Venezuelan President Hugo Chavez have discussed a peace proposal, the Associated Press said. An Arab League official said the group consulted with Venezuela on sending mediators to the North African country. Bullion gained the previous four days. Gold Declines From Near-Record Price Following Report of Libya Peace Plan
Reuters (Reported 3/3/2011)
Gold eased on Thursday after the Arab League said a Venezuelan proposal to end the Libyan conflict was under consideration, but entrenched uncertainty over the future of the region kept prices within sight of record highs. Arab League Secretary General Amr Moussa told Reuters on Thursday that the a plan to bring peace to proposed by Venezuelan leader Hugo Chavez was "under consideration. Gold dips after Libya peace plan, record in sight
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