Morning Gold Fix – April 1, 2011

FMX | Connect – www.fmxconnect.com - (Reported 4/1/2011)

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

June Gold settled at $1439.90 per troy ounce on Thursday, a gain of $15.00 for the day. Volatility was bid on today’s rally.

April gold was down  $5.7 to $1433.2 per 100 troy ounces as of 8:20 am EST this morning. The June U.S. dollar index was up 0.343 to $76.415. April platinum was down $0.1 to $1779.2 per 50 troy ounces. May silver was down 18.8 cents to $37.700.


Market Commentary

After the market tested yesterday’s 1414 area and bounced it seemed almost like a no-brainer we would rally today. Many will cite the bombing in the Middle East as a reason for the rally, or the dollar weakening, or various technical reasons. We can’t say what specific reason the market rallied on, but we can say this, we made new highs and for the first time didn’t get slammed off of them. Option-wise there was a lack of selling, although not necessarily a lot of buying. We viewed this selling as funds not having much with which to take profits. One of our favorite European funds came in buying a December three-way, putting pressure on December puts as it bought the call spread. It is interesting that today showed the front part of the curve bid, not the backs. We’ll see how that follows through tomorrow.

Post-close: Typical of this market, futures were swept down one to three dollars on air after the post-floor close. Why is someone doing this? We don’t know. Bear conspiracy theorists will say banks are pushing the market down. We believe someone is trying to get their shorts back by selling thin markets and hoping to be given decent volume on their bid on the way down but no one knows. It happened again when we went from 1439 to 1435 in after hours today; now we are back to 1437.50.

Technical Overview

JUN GOLD

The market is signaling for a secondary push to test for a breakout over the 144720-1450 highs. A close over 144720 should spark rallies for aggressive moves to 1460 and chance to launch a run to 1490. If trade has trouble extending rallies over 1440+, then be on guard for a slip to additional sideways congestion or flagging days around 1440-1420. A close under 140820* signals a peaking turn to drive setbacks to 1390-.

MAY SILVER

The market remains in a bull trend. Near term trade is still consolidating under the 3800 target, but lined up to attack into a breakout at new highs. If trade has trouble pushing over 3818, be prepared for a few more flagging congestion days and chance to drop to a test of 36415* support. A close under 36415* could trigger harder corrections, but only a close under 35325* marks a topping reversal. A close over 3800-3818 could fuel a fresh bull wave to 3930/4000+.

MAY COPPER

The market stayed capped by 44355* resistance and Wednesday’s outside bear day alerts for a slide back to key 422* support. A close under 422* marks a bear turnover and should pressure selloffs back against the mid March basing levels. Trade may bounce off 422* and correct inside Wednesday’s turnover, but a pop over 43790 is needed to spark rallies to again attack 44355* resistance.

Gold may gain in London, extending the longest streak of quarterly gains in more than three decades, as fighting in Libya and concerns about European debt spur demand for an alternative investment. U.S. political and military leaders said they’re unwilling to start providing arms for Libyan rebels as Muammar Qaddafi’s troops regained the upper hand. Ireland’s central bank instructed four lenders yesterday to raise 24 billion euros ($34 billion) following stress tests. Gold reached a record $1,447.82 an ounce on March 24 as fighting in Libya, the Japanese nuclear crisis and concerns about European debt boosted demand. Gold May Climb as Unrest in Middle East, Sovereign-Debt Concern Fan Demand


Reuters (Reported 4/1/2011)

Gold prices eased a touch in Europe on Friday ahead of hotly anticipated U.S. payrolls data for March, amid expectations that a strong number could increase the likelihood of tighter U.S. monetary policy. Spot gold was bid at $1,433.94 an ounce at 1107 GMT, against $1,436.48 late in New York on Thursday. U.S. gold futures for April delivery fell $4.30 to $1,434.60. Gold eases ahead of U.S. payrolls data

The big factor supporting gold recently has been inflationary expectations, which were given a boost yesterday by strong rallies in grains and livestock as well as ongoing strength in crude oil.  Comments yesterday from the Wal-mart CEO that consumers face “serious inflations” seemed to be laying the groundwork for higher retail prices ahead.  While equity markets in Asia and Europe were mixed during overnight trading, early indications are for the US stock market to open today’s session with moderate gains.  The Dollar was stronger against most of the major currencies during overnight trading.  Daily Metals Commentary.

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