Morning Gold Fix – October 6, 2011
FMX | Connect – www.fmxconnect.com - (Reported 10/6/2011)
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
December Gold settled at $1,641.60 per troy ounce on Wednesday, a gain of $25.60 for the day.
December gold was up $0.7 to $1642.3 per 100 troy ounces as of 8:30 am EST this morning. The Dec U.S. dollar index was up 0.415 to $79.800. October platinum was up 29.5 to $1507.5 per 50 troy ounces. Dec silver was up 51.8 cents to 30.870.
Market Recap
Gold and most other commodities rallied on Wednesday, encouraged by a weaker dollar and the perception that the ECB is moving closer to resolving the regional debt issues (most likely via a stronger and deeper-pocketed ESFS). A better-than-expected September payroll report from ADP also contributed to stronger sentiment.
After nearly two straight weeks of puts being bid and calls being sold, gold finally saw a departure from the trend, with back month volatility out-performing the fronts by a considerably margin. December 2012 volatility was up almost a percentage point, while November volatility was about half a vol lower and December 2011 was essentially unchanged. While bullion still remains mired in a trading range, speculators are loading up for the next big move. While opinions differ on the duration of the current down-trend, buyers are more optimistic that the rally will have resumed 6 months from now, and are spending on April-December 2012 options accordingly. Today saw large purchases of the November Calls and Call Spreads, revolving around the 1700 strike. Business in December was two-way, with both the 1725 Call and the 1450/1350 1x2 attracting interest. Fences inched back toward the calls across the term structure.
Market Prices
In the News
Bloomberg (Reported 10/6/2011)
Russia’s international gold and currency reserves declined for a fourth week, plunging $9.2 billion, the most since May, as Bank Rossii bought rubles, stepping up its defense of the currency. The country’s reserves tumbled to a four-month low of $516.8 billion in the week to Sept. 30, the central bank said on its website today. The four-week decline of $26.6 billion is the steepest since January 2009, when Bank Rossii arrested a ruble devaluation. The ruble depreciated 10 percent against the dollar in September. Russia’s Foreign Reserves Tumble $9.2 Billion, Most Since May
Reuters (Reported 10/6/2011)
Gold firmed in Europe on Thursday as a strong recovery in equity markets cut selling of the precious metal to cover losses elsewhere, and as physical buyers took advantage of lower prices to stock up. Spot gold was up 0.7 percent at $1,651.49 an ounce at 0910 GMT, extending the previous session's 1 percent gains. Trade is expected to be choppy ahead of a policy meeting and press conference from the European Central Bank later. Gold firms as stock markets rally ahead of ECB
Kitco (Reported 10/6/2011)
U.S. and European stock markets are firmer again early Thursday due to some investor optimism regarding developments coming out of the European Union, regarding its sovereign debt crisis. There are reports this week that EU monetary officials are working to shore up the weak European banking sector--in case Greece should actually default on its debt obligations in the near term. Comex Gold Trades Firmer on Follow-Through Strength From Wednesday's Gains; Data Inputs Awaited
Technical Overview
DEC GOLD
Overall the market is bearish and Tuesday’s outside bear day could end near term retracements. A close under 1591* will send selloffs to test 1560/154850 support for a larger downturn. Stable action over 1591* favors additional sideways corrections. However, still expect residual bear forces to blunt retracements under yesterday’s high. A pop over 168150 is needed to boost recovery moves to 169180* and 171590*.
DEC SILVER
The market is bearish and may again slip to test 28085* monthly support. A close 28085* should release bear trending trade to attack the recent swing low. Stable congestion over 28085*+ is suggesting a shift back to recovery action. A pop over 3143 will boost recovery rallies. A close over 3308 is needed to fuel retracements to test 3519*.
DEC COPPER
The market is bearish with trade still vulnerable to another selloff leg. A close under 296 is bearish and could trigger another washout leg to 280. We may see a swing back to corrective congestion at 315-32965*. However, closes over 32965* and 34635* are needed to start a bottoming turn and sustained corrections.
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