Daily Metals Newsletter

1/29/2016
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52 Week
High

1288.0 on
02/03/15

52 Week
High

17.856 on
05/18/15

52 Week
High

1257.0 on
02/05/15

52 Week
Low

1045.4 on
12/03/15

52 Week
Low

13.620 on
12/14/15

52 Week
Low

811.4 on
01/21/16

20 Day MA 1095.2

20 Day MA 14.072

20 Day MA 857.5

50 Day MA 1079.5

50 Day MA 14.089

50 Day MA 857.8

100 Day
MA

100 Day
MA

100 Day
MA

1106.6

14.663

909.1

PRECIOUS METALS COMMENTARY

01/29/16
The path of least resistance is pointing downward today
OVERNIGHT CHANGES THROUGH 3:15 AM (CT):
GOLD -3.80, SILVER -0.70, PLATINUM -3.30
Early Gold Change -$3.40 from the prior session.
LME Copper Stocks 241,250 tons +1,125 tons Shanghai copper stocks +17,653 tons to 213,090 tons.
OUTSIDE MARKET DEVELOPMENTS: Global equity markets were higher overnight because of positive leadership from the US on Thursday but also because of a surprise move by the
BOJ to a negative interest rate environment. A sharp rise in Euro zone M3 money supply (+5%) failed to match expectations but that still shows the ongoing influence of QE. The Russian
stock market was at times trading in negative ground and that might have been the result of talk of Russian oil production cuts. The US economic calendar begins with a US employment
cost index and a reading on fourth-quarter GDP that is expected to have slowed from the 2.0% pace in the third quarter. Data out of Canada offers a reading on November GDP and
December industrial production. The next US window presents January Chicago PMI, which is forecast to have improved from the 42.9 print in December. Finally, a private reading on
January consumer sentiment is forecast to have down ticked from 93.0 previously. San Francisco Fed President John Williams participates in a panel discussion and will offer an economic
forecast during the afternoon trading hours.
GOLD / SILVER
The April gold contract has reversed course after retesting and failing at the $1,125 level twice earlier this week. Cushioning the gold and silver markets against a full blown technical
correction is developing weakness in the Dollar and an ongoing bounce in energy prices. We also think gold and silver are garnering indirect support from gains in global equity markets
and perhaps some measure of support from the BOJ's move to negative interest rates. However, some traders might see the BOJ move to push rates below zero as a development that
gives credibility to the current level of uncertainty in Asia, while others might see that move as fresh easing which in turn could lend minimal support to physical commodities. While gold
looks to finish the month with moderate gains, gold derivative holdings failed to see a continuation of moderate inflows yesterday and that isn't surprising in the face of the corrective tilt of
the last 2 trading sessions. A normal corrective target off the December through January rally in April gold counts down to $1,097 and then again down at $1,087.40. Increased volume
and declining open interest in gold this week also suggests that a layer of longs banked profits and moved to the sidelines into the $1,126 peak. Unless the Dollar falls out of bed today
and/or there is a distinct restart to the Chinese financial crisis, we favor the downside in gold.
PLATINUM
The PGM complex has been caught up in the gold liquidation wave perhaps because of its short-term overbought technical condition. We would have expected PGM's to have garnered
more support from news yesterday that Lonmin announced a program to cut jobs and to reduce costs as that could set the stage for a reduction of output. However, some platinum mining
companies have posted year-over-year production gains but those readings are somewhat misleading because of the labor problems over the last two years cut production in the
comparison period. There was a supportive story overnight from a PGM industry group that suggested a world platinum deficit condition is likely to stay in place for a number of years but
only palladium seems to have benefited from that news. Near-term downside targeting in April platinum is seen down at $855.30 with similar support in March palladium not seen until the
$483.35 level.
TODAY'S MARKET IDEAS: The path of least resistance is pointing downward, but we don't get the sense that the market is poised for an aggressive liquidation washout. However, the
market was short-term technically overbought and to a degree the gold market might also be a little fundamentally overdone into this week's highs. In looking back, the gold market
seemed to be able to shift from one bullish focus to another but the inability to sustain the drive higher in the face of a slumping Dollar yesterday suggests that some bulls are walking back