10-19-10 Market Review for Gold and Silver

Gold Market Analysis for 10-19-10  

The December gold contract saw one of the biggest single day washouts since the middle of the summer. Apparently the combination of an overbought technical condition was exaggerated by the rise in the Dollar. However, as in a number of other physical commodity markets, the surprise rate hike from the PBOC really seemed to be the catalyst that kicked gold prices over the edge. Seemingly the gold market was mostly uninterested in the comments from the Fed today as the talk of additional easing and of the potential to see rising input costs passed on throughout the economy were mostly discounted as gold showed very little bounce action during the Tuesday trade. The Fed’s Fisher acknowledged the anxiety in the markets by suggesting the gold market was reflecting the high level of anxiety but even those comments didn’t seem to benefit gold prices in the early afternoon action.

10-19-10 – Silver Market Recap Report 

The silver market also saw a rather aggressive downside plunge today in the face of a decided shift in a host of outside market forces. The slide at first started out as a reaction to a Dollar bounce but the Dollar bounce extended and the selling impetus in silver was exaggerated by the news of a Chinese rate hike. Silver like other commodities have recently enjoyed mostly favorable outside market forces and today those outside forces seemed to reverse course. As in the gold market, the silver market was also thought to be somewhat over extended technically and therefore the initial violation of various chart support levels probably fostered even more selling pressure. The bulls suggested that a single Chinese rate hike wouldn’t kill the up trend while the bear camp was suggesting that the perfect storm of outside market forces had been tempered with the news flow Tuesday morning.

After reading the silver and gold review, traders might want to take a peek at the commercial traders momentum.  The Commercial Trader momentum can be tracked by using the Commodity Futures Trading Commission Commitment of Traders reports.  Our idea is that, in a value driven commodity futures market no one knows fair value like the people who produce it or, have to use it.  In fact, it is precisely their sense of value that provides the commodity market’s rhythmic meanderings that swing traders love so much.  Let’s face it, producers know when their product is overvalue and it should be sold just as well as end line users know when they should be stocking up at low prices. Therefore, trader should be able to incorporate this valuable information into their futures market education.

This blog is circulated by Andy Waldock.  Andy Waldock is a financial advisor, asset manager, trader, analyst and brokerfor Commodity & Derivative Advisors, located in Sandusky, Ohio.  Therefore, Andy Waldock may have positions for himself, his clients, or his relatives in any commodity future market discussed. The blog is meant for educational purposes and to develop a dialogue among those with an interest in the commodity future markets. The commodity markets may not be advisable for all investors due to the high degree of leverage.  Investing in the commodity futures could result in considerable risk.  If you are interested in reading other circulated articles, commenting  on his publications or subscribing to Andy’s blog, please visit http://blog.commodityandderivativeadv.com, or if you have any questions, please call 1-866-990-0777. 

The daily commentaries provide a summary of each commodity’s traded price activity, an analysis of the factors that influenced price activity, a recap of any reports released that day, and a look ahead at the next day’s schedule.  CME Group provides market commentaries for wheat, soybeans, corn, gold and silver.   The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed therein constitutes a solicitation of the purchase or sale of any futures or options contracts.

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