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OUTSIDE MARKET DEVELOPMENTS: With the Dollar managing to reach the highest level since early September overnight, it would seem like currency related selling pressure will remain in place for gold and silver prices. The bull camp in the metals complex had to be partially disappointed with the inability to benefit from news of ongoing rather stellar economic strength in the Chinese economy overnight. It also seems as if the metals trade generally remains unconcerned about inflationary prospects. In looking forward, the US will bring forth claims data, Philly Fed manufacturing figures and a Leading indicators report today but those numbers aren’t expected to provide much of a surprise from the economic front. With a host of physical commodities showing a liquidation pattern in the face of the ongoing Dollar gains and that action being accompanied by weakness in global equity prices, the bear camp in the precious metals complex would seem to have the benefit of the doubt.
GOLD MARKET FUNDAMENTALS: While the gold market saw evidence of a rise in gold production from a Russian gold miner, that news would not appear to be the reason for the early weakness in gold today. Clearly persistent gains in the Dollar has tripped up the gold market, with that mentality probably preventing the gold market from garnering support from news of a small Russian gold reserve buy. With the focus so intently on the direction of the US Dollar, the gold market also doesn’t look to benefit from talk that the availability of scrap gold supply in India might be set to dwindle. In other words, the focus on currency issues probably means that classic supply and demand side elements are going to be discounted. With the trade either expecting the Chinese to over tighten, or that the Chinese economy to falter it would seem like the trade is simply ignoring the potential for continued ongoing growth in China and that would seem to highlight the existence of a bearish spin in the gold market. With the US Treasury market showing consistent gains this week, it is also possible that markets like gold are even sensing a decline in flight to quality concerns off the possibility that US government spending efforts might somehow be restrained by a change in political winds.
SILVER MARKET FUNDAMENTALS: Technically, the silver market appears to have violated a series of key points with the overnight slide. In addition to falling below the 50 day moving average again the silver market has also failed to check up at classic retracement levels. Like the gold market, the silver market saw some potentially undermining silver production news from a Russian silver miner overnight but the real culprit behind the slide in silver prices looks to be the rising Dollar. However, the silver bulls have to be really disappointed with their inability to benefit from stellar Chinese economic readings that were released overnight and that is apparently the result of trade ideas that the Chinese government is ready and able to stop inflation before its takes a strong foothold. It is also likely that silver prices are being pulled downward by a general, but somewhat broad based physical commodity market liquidation pattern.
PLATINUM: We have to think that platinum is poised for more corrective action ahead, as the trade was overbought and the outside market forces are clearly favoring the bear camp. The failure to hold the $1,596.30 level, could add to the downward tilt in prices today, especially if the broad based physical commodity liquidation wave continues.
