The Hightower Report

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OUTSIDE MARKET DEVELOPMENTS: After the initial euphoria, concerns over the EU emergency aid package have revived strength in the Dollar again overnight and that in turn has put the euro under renewed pressure. As a result, equity markets throughout the world are weaker this morning. A prominent credit rating agency stated that downgrades were still possible for Greece and Portugal, even with the new EU aid package in place. Also a series of economic numbers from China for March released overnight showed that Chinese CPI was up 2.8%, Chinese PPI was up 6.8%, Chinese Industrial Production was up 17.8% and Retail Sales were up 18.5% from year-ago levels, all roughly in-line with expectations, but apparently those readings were strong enough to prompt fears of a Chinese rate hike ahead. UK Industrial Production for February was up a much higher than expected 1.9%, while German CPI for March was up an in-line 1.0%. The main US economic number this morning from the US will be February Wholesale Trade, which is generally expected to be up +0.3%. There will also be a 3 Year US Treasury Note auction result posted at mid day today.

GOLD MARKET FUNDAMENTALS: A rekindling of EU debt anxiety seemed to surface again last night, with a number of flight to quality markets like gold, registering action indicative of ongoing debt sector concerns. While some players are suggesting that the Chinese numbers overnight were capable of prompting a Chinese rate hike, those numbers on their face could also be considered supportive to metals prices. Surprisingly gold prices come into the US action higher this morning despite a weaker tone in the Indian gold market overnight. Some gold players are hopeful that the gold market will be able to benefit even if calmer financial waters surface ahead, as many economists suggest that the Euro zone stabilization plan could eventually be considered inflationary. However, the flight to quality angle in the gold market appears to have been a dominating focus of the trade recently and therefore the ebb and flow of anxiety is likely to remain a big influence on gold prices. It would appear that the ebb and flow of equity prices is the primary guide on anxiety levels and therefore gold and equities look to maintain an inverse relationship. Comex Gold Stocks were 10.269 million ounces up 29,018 ounces.

SILVER MARKET FUNDAMENTALS: While silver is showing some minor weakness this morning and appears to be diverging with the gold market, there doesn’t appear to be a major negative tilt facing physical commodity markets this morning. Certainly silver and other physical commodity markets are seeing some spillover weakness from the weaker global equity market action and perhaps because of lingering EU Debt fears. The market did see news of increased physical silver production from a key Canadian silver producer overnight, but minor changes in physical supply haven’t been given that much consideration lately. It is also likely that noted weakness in platinum and copper prices this morning have served to undermine silver prices. From the weak initial action in silver prices this morning, the trade seems to be suggesting that silver is still being viewed as a physical commodity, instead of a flight to quality instrument. Comex Silver Stocks were 116.548 million ounces down 196,140 ounces.

PLATINUM: The platinum market is logically under some pressure this morning, as macro economic optimism is missing today. However, the platinum charts appear to be giving off the impression that up trend channel support just under the market at $1,673 might be solid. However, the platinum market looks to be tightly correlated with the direction of global equity markets and that could mean some initial weakness this morning. On the other hand, in the event that the July platinum market manages to regain the $1,693.50 level, that could be a sign that the bulls have regained control over the market. In order for the bull camp to regain control might require a June S&P trade back above the 1150 level.

Below is a sample of our Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!

OUTSIDE MARKET DEVELOPMENTS: While a number of international equity markets managed to bounce overnight, one doesn’t get the impression that global economic sentiment has actually improved. In fact, the Dollar seems to have remained in favor, in the wake of ongoing fears toward the Greece financial condition. However, the markets did see a rather robust UK house price gain overnight, but that news might have been offset by surprising comments from Trichet, who suggested that the risk of a global depression was underestimated. However, economic sentiment might improve temporarily this morning in the wake of the US 4th quarter GDP reading. In fact, Obama early in the week hinted at an improvement in the US GDP report, but the trade already seems to have baked in a strong US GDP report for this morning.

GOLD MARKET FUNDAMENTALS: While the gold market seems to remain focused on demand prospects, the track of supply side news this week seems to have generally favored the bear camp. Fortunately for the bull camp news of a rise in Chinese gold production this week, was offset by news of a jump in Indian gold imports. However, the gold trade has to be concerned about residual strength in the US Dollar, as the Dollar managed yet another new high for the move early this morning and in the process the Greenback reached the highest level since September 1st. While the trade is generally anticipating a strong US GDP reading this morning, one would have to think that the market has already factored in a large portion of that type of result. The bear camp will point out that April gold remains below the 100 day moving average of $1,088.70 into the opening today, while the bull camp might try to play up the strong leap in UK house prices and a slightly positive early track in the US equity markets. For the gold market to benefit from higher equity prices today might require equities to maintain higher prices all the way into the close today, as rallies in stocks this week have been fleeting events.

SILVER MARKET FUNDAMENTALS: While May silver has managed to recover from the low forged yesterday, the bull camp would seem to have very few themes at its disposal. Clearly silver saw some pressure this week off a growing disappointment in the pace of the US economy, and those views also seem to have been enhanced by a very confusing political environment and by noted declines in US equity prices. Like gold, the silver market also seemed to be partially undermined by the resurgence of concerns toward the Greece situation. Furthermore, silver also seems to have be weighed down by noted weakness this week, in a host of physical commodity markets. In conclusion, the silver bulls appear to need something very positive from the US GDP report this morning, but the question is whether or not macro economic optimism will be sustained after the GDP reading is absorbed. It is also possible that a strong US GDP reading could lift the Dollar further this morning and that could serve to limit the benefit of economic optimism in most physical commodity markets.

PLATINUM: With a partially oversold technical condition and hopes of some positive news from the US economic report front, we have to give the initial edge to the bull camp. Therefore close-in support is seen at $1,500 today and we can’t rule out a rise back to $1,526. However, with a slack economic outlook still generally in place, traders should not shift back into a full bull mood.

Below is a sample of our Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!

OUTSIDE MARKET DEVELOPMENTS: While the UK saw a rise in nationwide home prices overnight, there doesn’t appear to be a definitively up beat view toward the global economy in place this morning. In fact, the market saw lower Euro zone price readings, softer German retail sales figures and a sharp slide in Japanese housing starts and that would seem to leave a slightly less up beat macro economic view in place than was present in the prior trading session. However, the Dollar action wasn’t definitive and therefore the impact on gold and silver prices from the currency markets early this morning is mostly limited. The market is seeing weaker initial equity prices and that might be considered a slight negative to the precious metals markets. The US will present Personal Income and Personal Spending readings this morning and the expectations for those readings are relatively benign. The trade will also see an important inflation reading from the US PCE index but with expectations calling for only a half percent gain in that reading, the metals markets probably won’t come away from the news with a huge inflation reaction. There are also some regional purchasing manager’s reports out later in the morning trade today, but the overall expectation today seems to be that the US numbers aren’t going to offer up anything impressive or surprising.

GOLD MARKET FUNDAMENTALS: While the direction of gold prices recently has seemingly been trained on the outlook for the US and global economies, the gold trade continues to see ongoing developments from an anticipated minor sale of Russian gold. The trade also saw a series of higher gold production figures from some key miners overnight, but that news doesn’t appear to be applying distinct pressure to gold prices. On the other hand, if the outlook toward the economy deteriorates again it is possible that the bear camp might try to play up the news of rising physical gold production. Clearly gold has behaved like a physical commodity this week, by falling sharply in the face of weak numbers and weak equities at the start of the week. However, the gold market did manage to rise sharply yesterday in the wake of favorable US numbers and very favorable equity market action. On the other hand, choppy to weak international equity market action overnight and somewhat slack international data flow overnight might serve to increase the importance of the US number flow later this morning.

SILVER MARKET FUNDAMENTALS: The bulls will tout December silver’s capacity to rise above the prior session’s high, while the bear camp will suggest that the silver market was unable to hold that pulse up attempt. With equities showing initial weakness and copper prices also under a bit of early pressure, the bear camp would seem to have an edge in the outside markets category. However, the Dollar action is mostly nondescript and unless the US numbers manage to offer up something slightly better than expected, it would not appear that the broad based economic optimism that was seen in the prior trading session will become a dominating view today. Nonetheless, the sharp recovery move in the prior trading session probably took away some of the bear’s confidence, that was built into the silver market early in the week. For the time being, the direction of silver prices might be largely influenced by the direction of US equities, as the scheduled US data today isn’t first tier data and the expectations for the data are pretty nondescript.

PLATINUM: Like gold and silver prices, it would seem like platinum over reacted to the favorable shift in economic sentiment. While we don’t expect to see an aggressive slide in platinum prices today, the path of least resistance might be set to point downward in the wake of nondescript US data and initially weak equity prices. In short, without a surprise bullish economic development, we see a bit of back and fill action in the platinum market today.