Morning Gold Fix – June 22, 2010

FMX | Connect – www.fmxconnect.com - (Reported 6/22/2010)

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

Gold washed out after a promising start on Monday, with the August future reaching an all-time high of $1266.5 per 100 troy ounces before an epic collapse. Gold fell about $35 to a low of $1231.6 before recovering slightly and closing at $1240.7, almost a 2 percent loss for the day. The selling has resumed in early morning and overnight trading as anxious investors take profits and question whether gold is overbought.

Buy the Rumor, Sell the News?

With all the news, rumors and factors that came out on the bullish side yesterday and last weekend it should be obvious to everyone why the market was lower; The Chinese have a time machine and knew what they were going to say before they did it. Then having positioned themselves before the event, they sold into the rally.

Fact is, despite China’s decoupling statement they elected to leave the USDCNY unchanged for the moment. The real culprit behind yesterdays’ selloff is the poverty mentality of scarred Gold longs. Gold bulls suffered through slow climbs backed with calamitous selloffs for years. The 13 year bear market in gold has scarred many people into thinking that the yellow metal cannot hold onto its rallies.  Comex open interest hit all time highs yesterday, that must be bearish! Thus, the prophecy fulfills itself. “Gold is up how much? Better take our profits, we got lucky” is what hedge fund managers say whenever gold makes them any money whatsoever. This is where the expression A Bull market climbs a wall of worry comes from. So puke all you want ye of little faith, we’ll be there buying all the way down to zero!!

Contango watch: Gold’s contango has decreased each of the last 3 days despite net weaker bonds and a net lower market.

August gold was down 5 to $1235.7 per 100 troy ounces as of 8:10 AM EDT, this morning. The September U.S. dollar index was up .231 to 86.21. July platinum was down 9.8 to $1580.5 per 50 troy ounces. Silver was down 8.8 cents to 18.72.

-Elizabeth Thawne

For Market Prices Click Here

Previous Session Options Commentary

There was little buying of options in the first part of the day as the market edged higher. Volatility was firm, but with no confirmation. There was buying in August 1275 calls, which was probably a fund covering. There was also buying in the December 11 2000 calls @ 37. Volatility weakened as the market reversed and sold off with the exception of August which seesawed back and forth between bid and offered, but in the end, it too capitulated coming in .18% on the day.

Significant Trading Activity

N10 1240 P

Q10 1275 C

N10 1275 C

Weekly Options Report

End of Day Straddle Runs

FMX Morning Newswire

Bloomberg (Reported 6/22/2010)

“Gold may rebound from the biggest slide in a month in London as speculation that European banks will struggle to raise money increases demand for the precious metal as a means of protecting wealth.

The metal dropped 1.8 percent yesterday after reaching a record $1,265.30 an ounce. European Central Bank governing council member Christian Noyer yesterday said some banks in the 16-nation euro region face funding difficulties. European equities fell for the first time in 10 days.” Gold Rises to a Record in London, New York on Commodity Demand

NS Futures (Reported 6/22/2010)

“While optimism off the Chinese currency peg change on Monday appears to be reversed this morning, the gold market hasn’t been able to definitively reverse the weakness that surfaced in the prior trading session off the news of change in policy. With a ratings agency predicting an increase in the chance of a double dip recession in Europe, it is possible that deflationary sentiment is serving to undermine gold prices today.

Equity markets both in Asia and Europe have moved moderately weaker this morning, which have pushed US stock indices lower during early overnight trading. After moving in both directions overnight, the Dollar has returned to unchanged levels and has mixed results against the major currencies going into the US opening.” Daily Metals Commentary 

Reuters (Reported 6/22/2010)

“Gold firmed in Europe on Tuesday as lower prices tempted investors back to the market, amid expectations demand for the metal as a haven from risk will support prices in the medium term.

Spot gold was bid at $1,236.90 an ounce at 0911 GMT, against $1,231.65 late in New York on Monday. U.S. gold futures for August delivery eased $2.70 an ounce to $1,238.” Gold up as haven appeal as lower prices tempt buyers

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