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Capital Trading Group - Daily Metals Commentary - Kitco

VIEWS: 9 PAGES: 3

									                                                                                   Daily Metals Commentary
                                                                                      Monday November 25, 2013




                         One Financial Place | 440 S LaSalle St, Suite 2301 | Chicago, IL 60605
                         Phone: 800-238-2610 | nsloane@ctgtrading.com | www.ctgtrading.com



If you would like to learn more about investing in alternatives in the metals managed futures arena and/or would
like to receive our 3 page special metals report without any obligation, please email us at
nsloane@ctgtrading.com or call at 800-238-2610.



PRECIOUS METALS COMMENTARY
11/25/13

TAPERING FEARS, AN IRANIAN DEAL & ADVERSE CURRENCIES FAVOR
THE BEARS

OVERNIGHT CHANGES THROUGH 6:05 AM (CT):
GOLD -12.90, SILVER -17.20, PLATINUM +4.10

London Gold AM Fix $1,231.75, -$10.00 from prior AM Fix. LME Copper Stocks
437,500 tons -1,600 tons.
Gold Stocks 7.193 million ounces -34, Silver Stocks 170.530 million ounces
+2,536,018

OUTSIDE MARKET DEVELOPMENTS: Global equity markets were mostly higher in overnight and early morning
action, supported by prospects for cheaper oil prices and by a groundbreaking deal over Iran's nuclear program. It
also seemed that the Iranian agreement bolstered global economic sentiment, with an added measure of support
coming from the approaching month-end and also from ideas of a start of a Christmas rally. The Japanese Nikkei
added another 1.5% in overnight action, helped by a rally in export-related shares and by weakness in the Yen.
Meanwhile, shares in China slipped 0.5%, weighed down by weakness in the shares of Sinopec after last week's
pipeline explosion. However, declines were limited following gains in defense-related shares. The tone was
positive in Europe, led by a new record high in the German Dax. Some of the upside in the European markets
came off of positive sentiment that world leaders and Iran were able to come to an agreement over Tehran's
nuclear program. Another source of support in the early European trade might have come on comments from an
ECB official noting the potential for another rate cut to offset deflationary pressure. The major US indices jumped
into new contract high territory overnight, with some traders looking for the start of the Christmas rally.

GOLD
GOLD MARKET FUNDAMENTALS: Last week's sell-off in gold and the overnight extension puts gold prices
down to the lowest level since July 8th. While there were no critical Asian economic numbers for the market to
digest overnight, a sharp recovery in the dollar and even more gains in equities have left a bearish outside market
environment from last week in place again today in gold. Reports last week that Germany (the world's second
largest holder of gold reserves) reduced their gold holdings during October, probably weighed on gold prices
during Friday's session, but with the ongoing slide in gold prices again overnight, it is also possible that classic
technical stop loss selling pressure added into the downward track in gold prices this morning. Ongoing declines
in gold derivative holdings, news of a noted decline in Indian April through October gold jewelry exports, clearly
leaves the bear camp with a fundamental edge this morning. Another issue adding into the downward pressure in
gold prices this morning is news that Iran carved out a deal to reduce sanctions and that in turn has resulted in an
extraction of safe haven interest in gold. With the potential for lower tensions in the Middle East, that has also
increased the attractiveness of equity investments relative to gold. The Commitments of Traders Futures and
Options report as of November 19th for Gold showed Non-Commercial traders were net long 71,840 contracts, a
decrease of 12,863 contracts. The Commercial traders were net short 77,159 contracts, a decrease of 12,949
contracts. The Non-reportable traders were net long 5,319 contracts, a decrease of 86 contracts. Non-
Commercial and Non-reportable combined traders held a net long position of 77,159 contracts. This represents a
decrease of 12,949 contracts in the net long position held by these traders. While the COT report probably
overstates the spec long positioning in gold due to the declines forged after the report was compiled, (gold to the
low this morning is roughly $50 an ounce lower from the report) many traders think that even more longs could be
forced from their positions ahead. Comex Gold Stocks were 7.193 million ounces down 34 ounces. The easing of
Iranian sanctions, adverse currency market action and ongoing technical chart damage leaves the bear camp with
the edge. In fact, there might be little in the way of significant support in the market until the December contract
falls to the even number $1,200 level in. Declining volume and open interest might continue as the technical
damage exerts its force on prices. Initial downside targeting is seen down at $1,209.40 and it could take a
recovery back above $1,236 just to begin to shift the technical bias away from the bear camp. Aggressive traders
can sell December gold on a minor recovery bounce to $1,236, looking for an eventual slide to $1,200.

SILVER
SILVER MARKET FUNDAMENTALS: Silver prices late last week failed to climb back above the key $20.00 level
and they have remained under pressure again overnight with a fresh lower low for the move and a decline to the
lowest level since August 8th. Clearly the potential for a noted deflating of Middle East tensions off an Iranian
nuclear deal, left the bear camp with a fundamental edge overnight. Ongoing declines in silver derivative holdings,
adverse currency market action and spillover selling pressure from gold liquidation suggests that an overall
bearish environment is facing silver at the start of the new trading week. The Commitments of Traders Futures
and Options report as of November 19th for Silver showed Non-Commercial traders were net long 12,774
contracts, a decrease of 4,524 contracts. The Commercial traders were net short 21,013 contracts, a decrease of
6,447 contracts. The Non-reportable traders were net long 8,240 contracts, a decrease of 1,921 contracts. Non-
Commercial and Non-reportable combined traders held a net long position of 21,014 contracts. This represents a
decrease of only 6,445 contracts in the net long position held by these traders. While December silver to the lows
this morning, fell nearly 77 cents an ounce from the level where the COT report was measured, it could take more
downside action to bring the long positioning down to the 4,000 contract net spec long level that was seen in June
of this year. Comex Silver Stocks were 170.530 million ounces up 2,536,018 ounces and that might be a big
enough single day exchange stock rise, to add to the downward bias in silver prices today. Comex Silver Stocks
are now at the highest levels since 07/15/1997. Clearly silver has fallen victim to Iran's weekend nuclear solution
and that in turn has forced some added liquidation pressure into the equation. Rallies above the 20.00 level in the
December silver contract appear to be good selling opportunities for the coming week, as outside market factors
should continue to force silver prices back down toward the middle of the late July and early August consolidation
zone down at $19.54. In order to turn the bearish tide around, probably requires a rally and "close back above
$20.00" and perhaps even a rise and close back above $20.20.



METALS TECHNICAL OUTLOOK:
Note: Technical commentary is based solely on statistical indicators and does not necessarily correspond to any fundamental analysis that
may appear elsewhere in this report.


COMEX GOLD (DEC) 11/25/2013: Daily stochastics declining into oversold territory suggest the selling may be
drying up soon. The close below the 9-day moving average is a negative short-term indicator for trend. The
market has a slightly positive tilt with the close over the swing pivot. The next downside target is 1235.9. With a
reading under 30, the 9-day RSI is approaching oversold levels. The next area of resistance is around 1247.5 and
1251.9, while 1st support hits today at 1239.5 and below there at 1235.9.

COMEX SILVER (DEC) 11/25/2013: Momentum studies are still bearish but are now at oversold levels and will
tend to support reversal action if it occurs. A negative signal for trend short-term was given on a close under the
9-bar moving average. It is a slightly negative indicator that the close was lower than the pivot swing number. The
next downside target is 1966.5. With a reading under 30, the 9-day RSI is approaching oversold levels. The next
area of resistance is around 1997.5 and 2012.5, while 1st support hits today at 1974.5 and below there at 1966.5.
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