Fx daily 24 apr 2008 (metals)

Comex gold today closed 906.00-06.50 after a high of 908.50-09.00 and low at 896.75-97.25. The open below 910.00 kicked off selling on the bell, which was also backed then by a lower euro and lower crude oil. Huge two-way business transpired around 900. We saw better buyers, but sellers won out initially. Once all the stops were done, however, gold embarked on a slow creep higher. Buying of $1000-strike call option pit then supported spot, leading to a meander inside 904-907 for the rest of the session.

We view the breach of 910.00 and first probe of the 100-day moving average, 901.50, as likely to lead to more weakness. That said, the market is already quite bearish and crude oil hasn’t relented. Be careful with shorts.

Comex silver today closed 17.19-22 after a high of 17.33-36 and low at 16.99-02. Selling straightaway cost silver 20 cents from 17.27-30; the catalyst was gold selling at the same time. The sharp, nasty dip to 17.00 afterwards, however, was bought into, mostly in small amounts but enough on the whole to catch day traders short and re-visit 17.20. Lingering inside 17.15-25 for two hours ended with a surge to the highs on the back of constructive crude oil inventory numbers and EURUSD trading up to 1.59.

The fade into the close, the first beneath 17.40 in the better part of three weeks, makes short-term prospects uncertain. The (rising) 100-day moving average at 16.95 should provide some support; it hasn’t been breached since September. Short-term resistances are 17.40 and 17.70.

Platinum today closed 2000-10 after a high of 2004-14 and low at 1990-2000. Buyers sub-2000 lent a prop. We’re neutral here, in the middle of the range. Palladium closed 443-46 after a high of 447-50 and low at 442-45. Palladium felt heavy most of the session and closed on recent lows. The market (still) feels a touch long and vulnerable to modest stops below 440. We’d view such a selloff as presenting a short-term buying opportunity. Key support is 420-25.

Base metals today closed mixed, with copper, zinc and lead lower, aluminium and nickel modestly higher and tin up 6%. Base, like all metals, appeared linked at the hip to crude oil and the euro.

Copper’s inside day cost it 1.2%. The strikes in Chile are apparently close to being settled. Yet copper remains firmly ensconced in a 8400-8800 range, and we’re still constructive for an eventual topside test. A loss of 8300, however, would be significant. Ali gained on the day though finished well off the highs and remains in the top half of the recent range. The relentless march higher of power prices and a rising trendline have us somewhat favorable to ali in the short term.

Zinc finished an outside down day with a vapid close, though off the lows. We maintain our long-standing view to be long or flat - downside extensions don’t impress and the market is likely short. Lead shed a percent in quiet trade with the metal confined to 2750-2875 at the moment. Nickel closed largely unchanged but holding 28,500. We’d attempt a tactical long here just below 29,000 with a stop below 28,000 for a move back to 31,000 - a bet that the impressive basing price action around 28,500 will prevail over a long declining trendline.

Tin erupted in one of the biggest single day upmoves in recent memory on reports that a major short was capitulating; volumes were substantially higher than usual. If true that’s true, a correction may well be due, and some profits should be taken at these levels.

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