Thursday, March 09, 2006


Watch 'Technicals In Correction Phase': Barclays

Reuters reports on the markets. "Gold rebounded on Thursday from its lowest level in three weeks following a pickup in physical demand, a recovery in oil and some weakness in the dollar, but investors remained cautious and waited for a sustained rise. Silver also recovered after tumbling more than 3 percent the previous day."

"'I don't think this (drop) is enough to put investors off completely, there is still a huge amount of money coming into commodities,' Stephen Briggs, economist at SG Corporate and Investment Banking, said. 'But I do think it will be harder work getting back towards the highs now,' he said."

"Dealers said gold tried but failed a couple of times in recent weeks to breach recent highs as investors booked profits. It might struggle to jump again in the near term in the absence of fresh catalysts. Spot gold rose as high as $550.10 an ounce and was worth $545.60/546.50 an ounce late in New York, compared with $542.60/543.30 on Wednesday when it slipped 1.6 percent on fund-led selling."

"But technical analysts said the market was vulnerable to a further correction. 'The market could be subject to further weakness in the near term towards $535. The technical charts will be closely monitored in this correction phase for any signs of a broader trend reversal,' Barclays Capital said in a report."

"Analysts said fundamentals were unchanged, with a standoff over Iran's nuclear ambitions likely to lift safe-haven buying. Iran vowed on Thursday not to compromise in its nuclear dispute with the West."

"The price drop in gold attracted buying interest from jewellers and investors in India, Indonesia, Thailand and Malaysia. Consumers in India, the world's largest gold buyer, have begun buying gold to meet their needs in the wedding season, which peaks in April and May, dealers said. 'The sharp price falls have seen the beginnings of some bargain hunting by consumers and investors, although whether this will be enough to turn the markets higher remains to be seen,' Alan Williamson, analyst at HSBC Bank, said in a report."

"The dollar steadied against the yen as traders cooled to the idea that the Bank of Japan's scrapping of a five-year-old ultra-easy monetary policy means strong short-term demand for yen-based assets. It also showed firmed against the euro, despite news of a record U.S. January trade deficit."

"Oil prices rose after falling sharply Wednesday. Firm oil lifts the metal's allure as a hedge against inflation. Spot silver rose to $9.96/9.99 an ounce from $9.84/9.87 late on Wednesday when it lost three percent. Platinum rose to $1,016/1,020 from $1,008/1,012 an ounce previously. It had touched a three-week low of $999 an ounce this week. Palladium climbed to $285/289 an ounce, vs. $277.50/281.50."

Barclays is right about focusing on the technical picture in these types of juntures, IMO. I got a free month with EWI for becoming an affiliate. I will go to their site and hopefully post some of their technical work on the metals later today.
I have a hard time seeing how the Iran issue will end in anything but an embargo or a war. Either way, oil and metals go north.

All other "fundamentals" (the silver ETF included) pale before the Iran issue in terms of overall impact on prices.

This smells like a good buying opportunity (and maybe the last for some time).

Dude, you managed to get out before this correction, but the flight of "hot money" didn't really take it down that far. Ready to jump back in? Just curious...
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