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OUTSIDE MARKET DEVELOPMENTS: Clearly a number of challenging issues are facing physical commodities in the early trading hours of the new trading week. In addition to concerns of European slowing, off the lingering Ash cloud, the markets are also seeing renewed concerns toward Greece debt as spreads between Greek debt and German debt have reached back out to near record levels. The addition of US legal action from late last week against a major US financial player has generated an added layer of pessimism for most physical commodity markets like gold and silver. With global equity markets under pressure again this morning that seems to have added to the widespread negative attitude in the marketplace. In looking forward, the trade will probably not give that much attention to the Conference Board leading indicators report this morning even if that report shows a minimal improvement. Similarly the markets might not pay that much attention to several key US corporate earnings reports scheduled for release later today. In short, given all the distractions facing the markets this morning, it is possible that potentially favorable earnings news from the US financial sector this morning could be simply lost in the shuffle.
GOLD MARKET FUNDAMENTALS: The gold market is seemingly facing a negative tilt for most physical commodity markets this morning and given residual weakness in equities and bearish action from the currency markets overnight, the bear camp seems to have a number of arguments in their court in the early action today. Some players have even suggested that lingering slowing concerns off the air travel shut down in Europe is adding into the negative tilt in the marketplace today. Apparently risk appetites are also being pared in the face of recent developments and that is thought to pressuring some physical commodity longs. The Commitments of Traders Futures and Options report as of April 13th for Gold showed Non-Commercial traders were net long 247,279 contracts, an increase of 23,427 contracts. The Commercial traders were net short 292,244 contracts, an increase of 24,396 contracts. The Non-reportable traders were net long 44,965 contracts, an increase of 969 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 292,244 contracts. This represents an increase of 24,396 contracts in the net long position held by these traders. Comex Gold Stocks were 10.092 million ounces down 2,028 ounces at the end of last week.
SILVER MARKET FUNDAMENTALS: The silver market in the early action today appears to be acting like a classic physical commodity facing a large wave of economic uncertainty. While the market was expected to face lingering concerns off the legal troubles on Wall Street, the market might not have expected that situation to be showing signs of extending to the international realm today but comments from UK officials overnight seem to have fostered those type of concerns. While the Volcanic ash situation continues to contribute to fears of European slowing, the silver trade is also taking note of rather wide spreads on Greek debt into the US early Monday trade action. While this market hasn’t paid much attention to classic supply side supply stories lately, the threat of lost supply out of Peru from last week was moderated overnight with the news of a potential end of a labor situation in that country. With equities trading weaker, the Euro weak and the overall outlook for growth suspect in the current environment, the bear camp in silver is probably feeling confident. However, the bull camp in silver is hopeful that favorable US corporate earnings and a potentially positive Conference Board leaders report later this morning can effectively alter sentiment. Comex Silver Stocks were 115.599 million ounces up 12,733 ounces at the end of last week. The Commitments of Traders Futures and Options report as of April 13th for Silver showed Non-Commercial traders were net long 40,798 contracts, an increase of 2,415 contracts. The Commercial traders were net short 58,235 contracts, an increase of 4,141 contracts. The Non-reportable traders were net long 17,437 contracts, an increase of 1,726 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 58,235 contracts. This represents an increase of 4,141 contracts in the net long position held by these traders.
PLATINUM: With a fresh range down failure on the charts this morning and a long list of negative outside market elements in place this morning, the bear camp would appear to be in full control. In fact, with the “combined” spec and fund net long position in platinum hitting a new record level at 28,327 contracts early last week that would seem to leave the market fully vulnerable to even more downside work directly ahead. Initial downside targeting is seen at $1,672 but that support level will mean nothing if the trade starts to toss around the idea of fund liquidation among the firms charged with violations. In the end, we see a possible downside target of $1,645 basis the July platinum contract.
