Morning Gold Fix – June 13, 2011
FMX | Connect – www.fmxconnect.com - (Reported 6/13/2011)
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 $1529.20 per troy ounce on Friday, a loss of $13.50 for the day. Options went bid for the put in the wake of a major washout.
August gold was up $.80 to $1530.00 per 100 troy ounces as of 8:30 am EST this morning. The September U.S. dollar index was down 0.056 to 75.13. July platinum was down $14.3 to $1818.70 per 50 troy ounces. July silver was down 59.7 cents to 35.73.
Options Commentary
There was a triple play against gold going higher today: the dollar was firmer, there were worries about the impending end of QE2 and no bad news coming out of Greece. All sent gold lower. The pattern we’ve seen has been that absent sovereign crisis news (Portugal, Greece, etc..) gold acts like a commodity and moves in sympathy with other commodities. When those other commodities are worried about the end of QE2 gold worries about the end of QE2. When markets worry about sovereign default gold behaves like a currency. Today the dollar rallied against the euro, implying that Europe will monetize its issues and gold chose to ignore that inflationary news, instead focusing on its dollar-denomination qualities.
As for options, today was classic GLD-influenced activity. The market opened lower, calls were slammed, puts were bid and straddles were unchanged. As the market continued lower straddles were bid, puts started to pop some more and calls started to attract some interest. For the first time in a while we saw call skew go negative in the front month options during the selloff. Simultaneously, 50 delta risk reversals in December traded a vol over for the call. On one hand, you have to be nuts to be buying calls in October and December with calls trading so cheaply in the front months. On the other hand, if you are short those October and December Calls, July will not help and neither will August. One final note: we continue to see straddle offers in deferred months. We aren’t sure but think this might be symptomatic of producer related hedging.
Market Prices
In the News
Bloomberg (Reported 6/13/2011)
Gold declined for a second day in London as some investors sold the metal to cover losses in other commodities markets and equities. Crude oil declined for a second day in New York before reports that may show slowing economic growth in the U.S. and China, while tin led industrial metals lower on the London Metal Exchange. Gold Declines as Investors Cover Losses in Commodities, Equities
Reuters (Reported 6/13/2011)
Gold fell on Monday as the euro eased against the dollar, but concerns about the euro zone debt crisis sustained investor interest in the precious metal as a safe store of value. Bullion fell almost 1 percent on Friday, its biggest one-day decline in a month, due to a rally in the dollar and broad commodities losses. Gold falls on dollar, safe-haven status supports
NSFutures (Reported 6/13/2011)
At least in the early action today, August has forged a fresh new low for the move and in turn managed the lowest trade since June 2nd. The action in currency markets doesn’t look to be providing the majority of the pressure on gold prices this morning, but it is possible that slackening economic expectations and talk of Japanese style stagflation in the US, from key Democratic operative over the weekend was impacting the gold market. 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 rejections up around 1550+ caution for a slip to sideways or defensive congestion along 1525-1516. A close under 150420* will signal a topping 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+. Any setbacks up around 3800 should caution for another flip to near term sideways corrective flagging days. A close below 3480* marks a bear turn into a secondary downswing against the last swing lows under 3349-. Dips that hold and bounce off 3516 to allow bull forces to attempt another upswing. A pop over 3786 is friendly.
JUL COPPER
The market has been staging a short term recovery, but needs a push over 41740 to revive bull forces and send retracements to 423-425. A close over 42725 is bullish. Current setbacks show corrective congestion testing 40505*. Tight congestion off 40505* will bull flag. Closes under 40505* and 39905* signal a reversal into a secondary downswing to 395-.
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