Morning Gold Fix – May 31, 2011
FMX | Connect – www.fmxconnect.com - (Reported 5/31/2011)
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 $1536.30 per troy ounce on Friday, a gain of $13.50 for the day. Calls were bid on a decisive rally in the underlying.
June gold was down $0.7 to $1535.6 per 100 troy ounces as of 8:30 am EST this morning. The June U.S. dollar index was down 0.355 to $74.675. Jul platinum was up $36.2 to $1836.2 per 50 troy ounces. Jul silver was up 61.7 cents to 38.480.
Options Commentary
June Gold was called $8 higher and after opening at 1530 it traded sideways for a short period of time. We’ve mentioned 1535 as a key resistance area for futures and it certainly kept a lid on the market for an hour or so. During this time period option activity was choppy and volatility was stable, but offered. It appeared as if the long weekend was coming out from the opening bell. At 9:30 GLD opens, at this point in the day, one can often get a good feel for what the retail community wants to do. Today it wanted to buy. Futures started to rotate higher and July led the way with bids to the call side. As the day wore on calls were bid across the board while straddles were offered. Puts took a beating as the market took on very bullish expectations.
During the day we saw some options activity similar to our stalking horse 1600 Call buyer. The volumes were light but the tactics were consistent. The August 1600 Call and August 1620 Call (after the close) all were bought and remained bid in small increments as futures sold off. About 1500 of the August 1600 Call traded during that period. Overall, volatility was slightly higher on the day but volumes were unimpressive. The floor is closed for Memorial Day. Globex will be open for abbreviated hours, and Clearport will be open.
Market Prices
In the News
Bloomberg (Reported 5/31/2011)
Palladium’s biggest shortage in three decades means this year’s worst-performing precious metal may rebound as growth spurs record car sales and prompts Goldman Sachs Group Inc. (GS) to say the commodities bull market is intact. The 1.6 million-ounce deficit seen by Standard Bank Plc explains why prices for the metal used in catalytic converters will rise 24 percent by Dec. 31, based on the median estimate in a Bloomberg survey of 24 analysts and traders. Autocatalysts are fitted to 95 percent of new cars and global sales will rise 5.1 percent to 76 million this year, according to Oxford, England- based J.D. Power Automotive Forecasting. Palladium Rising as BMW Becomes Catalyst for Biggest Shortage in 32 Years
Reuters (Reported 5/31/2011)
Gold steadied around its highest in nearly four weeks on Tuesday, supported by investor nervousness over the race in Europe to avert a Greek debt default, although stronger equities and oil tempered gains. A Wall Street Journal report that Germany could make concessions on efforts to put together a bailout for Greece lifted the euro and boosted equities and base metals at the expense of perceived safe-havens such as gold or bonds. Gold steadies near four-week high; Greece in focus
NSFutures (Reported 5/31/2011)
The gold market managed another new high for the move overnight, with the June gold contract reaching the highest level since May 4th in the early Tuesday US trade. Apparently a slightly improved outlook for Japanese manufacturing and decent Euro zone economic readings have provided a somewhat positive macro economic backdrop this morning, which might be accentuated by renewed strength in energy prices. Global equity markets were generally higher during the overnight and early morning hours, with indications that US equity markets would open with sizable gains this morning. Daily Metals Commentary.
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