Morning Gold Fix – May 27, 2011
FMX | Connect – www.fmxconnect.com - (Reported 5/27/2011)
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 $1522.80 per troy ounce on Thursday, a loss of $3.90 for the day. Volatility was offered on a slight down move for the underlying.
June gold was up $7.2 to $1530 per 100 troy ounces as of 8:30 am EST this morning. The June U.S. dollar index was down 0.592 to $75.040. Jul platinum was up $12.1 to $1790.2 per 50 troy ounces. Jul silver was up 75.0 cents to 38.080.
Options Commentary
June futures expired yesterday around the 1525 area, which was essentially a pin of the strike. The market lingered there post-close in a range between 1523-1531, looking for direction after the options expired. It found it on the sell side during London time. Today the market came in around 1522, paused for a bit, and then sold off pretty hard. We think there was a large futures buyer over the last 2 week and also think that he is finished. The market looks like it is ready to roll over.
Today was a continuation of yesterday with a complete lack of interest in options on the buy side. The first selling came in the form of July puts. Everything from the 1150 strike up through the 1450 strike was easy to buy. After that, everything across the board started to come in. Even on the lows, there was no interest in put buying.
Today saw a distinct change in call behavior. Call skew came in in every month with October and December taking the brunt. It seems the 1600 Call buyer is done and the market is beginning to digest that. Other than the skew changes and the volatility offers, the market was lackluster in options.
Market Prices
Technical Analysis (GRI)
JUN GOLD
Overall the market remains in a short term peaking turnover. However, the near term thrust up from tight congestion, alerts for secondary rallies. Look for attempts to continue climbing rallies and stretch to a test of 153430* resistance. A close over 153430* should launch secondary drives against the last swing high. Stalled action against 153430* hints for a reversal. A close under 149060* will likely renew selloffs to 146150*.
JUL SILVER
This week’s rallies signal a short term upturn, calling for retracement rallies to 3900 and chance to spike over 4000+. Despite yesterday’s reversal action, trade is poised for rallies. Be prepared for 1-2 corrective days, but dips that hold off basing congestion under 3575- will keep the market bias friendly. A close below 3480* is needed to rekindle bear trending moves.
JUL COPPER
The market is suggesting a short term shift to positive trade. A thrust over 416 confirms a reversal and should fuel a retracement climb to 423-425. Trade could slip and congest sideways for a couple days, but tight congestion will bull flag and positive for advances. A close under 39680* is needed to release a secondary downswing to 389-38535.
In the News
Bloomberg (Reported 5/27/2011)
Zambia approved Barrick Gold Corp. (ABX)’s purchase of the Lumwana copper mine as part of a C$7.3 billion ($7.5 billion) takeover of Equinox Minerals Ltd. (EQN), the southern African nation’s antitrust body said. Barrick, the world’s largest producer of the metal, must let the Zambia Consolidated Copper Mines Investment Holdings keep its 2.2 percent stake in Equinox as a condition of the approval for the deal, the Zambian Competition Commission said in an e-mailed statement today. It must also honor Lumwana’s existing agreements with a local smelter and suppliers, while limiting job losses, the commission said. Zambia Approves Barrick Gold’s Take Over of Equinox’s Lumwana Copper Mine
Reuters (Reported 5/27/2011)
Gold prices climbed on Friday as worries about Greece's debt crisis triggered buying by investors looking for a safe place to park assets, while the softer dollar also helped underpin sentiment. Spot gold was bid at $1,525.29 a troy ounce at 1123 GMT from $1,518.10 late in New York on Thursday. Weak dollar, Greek debt boost gold's appeal
NSFutures (Reported 5/27/2011)
With some modest strength in Asia overnight and some weakness in the Dollar to start the Friday morning US gold trade, the bull camp probably feels like they have a slight edge from the outside market action. While the Greek debt issue wasn’t throwing off significant and overly fresh news overnight, that issue remains a key issue in the market and with the US economic numbers this week creating some doubt for the standing of the Greenback, the safe haven mantra is credible one again. Daily Metals Commentary.
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