Morning Gold Fix – June 9, 2011
FMX | Connect – www.fmxconnect.com - (Reported 6/9/2011)
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
August Gold settled at $1538.70 per troy ounce on Wednesday, a loss of $5.30 for the day. The market stumbled back from an early deficit and closed without any real resolution in options.
August gold was down $1.10 to $1537.60 per 100 troy ounces as of 8:35 am EST this morning. The June U.S. dollar index was down 0.214 to 73.725. July platinum was down $8.2 to $1823 per 50 troy ounces. July silver was up 4.1 cents to 37.03.
Options Commentary
Futures were called lower after trading as low as 1531.80 overnight. They began to trek higher almost immediately however, as bullish speculators came in purchasing calls and ratio call spreads. First, the October 1600/1690 1x2 Call spread was purchased by a fund about a 1,000 times. At that moment it seemed like the call wing would collapse under the weight of the two options that liquidity providers bought (the 1690s). Soon thereafter a buyer of the December 1850 Call surfaced on Globex, rapidly amassing over 1,500 contracts at prices between 10.8-11. We think this was a fund or a private bank buy recommendation.
Dealers started the day buying put and selling call in October in risk reversal form. By the end of the day they were seen selling straddles. On the day volatility was unchanged, and call skew was bid. Call buying in August was conspicuously absent, suggesting it may be past its prime and that speculators are turning their interest to December instead. All in all, it was an odd day. Today was especially peculiar because of impulsive call-buying during the sell-off, which didn’t seem to make sense. There didn’t seem to be any reason to rush; the market was down.
Market Prices
In the News
Bloomberg (Reported 6/9/2011)
Gold may advance for the first time in three days after grain and energy prices surged, boosting the precious metal’s appeal as a hedge against inflation.
“We expect more upside for gold and platinum-group metals,” Stefan Graber, an analyst at Credit Suisse Group AG, wrote in a report today. “Today’s ECB meeting and its impact on interest rate expectations will be followed closely.” Gold May Gain as Rallies in Corn, Oil Fan Concern Inflation May Accelerate
Reuters (Reported 6/9/2011)
Gold held near $1,535 an ounce in Europe on Thursday, little changed from the previous session, as traders took to the sidelines ahead of the European Central Bank meeting later in the day. The ECB is expected to leave interest rates on hold for the time being but to indicate a rise is on the way in July. It is unlikely to unveil significant detail of a new bailout package for heavily-indebted Greece, analysts said. Gold holds near $1,535/oz ahead of ECB
NSFutures (Reported 6/9/2011)
The gold market starts the Thursday US trading session off on a slightly weaker footing despite somewhat supportive currency market action. Apparently residual concern of slowing in the US economy had lost its capacity to foster safe haven buying of gold, or perhaps the magnitude of the slowing fears in the US aren’t higher enough to prompt fresh buying action. Daily Metals Commentary.
Technical Analysis (GRI)
AUG GOLD
The market is in a secondary bull upswing, but trade is against resistance associated with the previous 1550 downturn level. A close over 155450 is needed to spark rallies to a breakout attempt over the 157770 swing high. The rejection up around 1550+ cautions for setbacks and may foster a slip to sideways or defensive congestion along 1525-1516. A close under 150420* is needed to signal a turn back to bearish trade.
JUL SILVER
The market is still in a short term upturn, holding potential for retracement rallies to 3900 and chance to spike over 4000+. However, the setbacks last week still caution for near term sideways corrective flagging days. Dips that hold and bounce off 3500+ will allow bull forces to attempt another upswing. A close over 3770 is friendly. A close below 3480* marks a bear turn into a secondary downswing against the last swing lows under 3349-.
JUL COPPER
The market is showing sideways action off the 9550* weekly support, consolidating the sharp decline of early May. A close under 9831* is needed to rekindle bear trend forces and drive trade to another test of 9550*. A close under 9550* is bearish and projects a fresh selling wave to 9300-9200. Holding 9831* yesterday prompted rebounds, but a punch over 10331 is needed to kick off a run to 10516 / 107+.
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