Dear CIGAs,

There really is not a whole lot to say today about gold. It is like watching paint dry.  Rangebound trade continues to be the order of the day with $940 the top and $920 the bottom within a broader range of $960 and $900.

The case is different for the mining shares however. They are attempting to push on up to test the recent swing highs in both the HUI and the XAU. Both indices are trading above their respective 10 day moving averages which is friendly with the 20 day making a bullish upside crossover of the longer term 40 and 50 day moving averages. AS I said yesterday, it is still unclear if the shares are leading the bullion price and portending a move higher in it or are moving in tandem with the broader equity markets which have rebounded into positive territory here as I write these comments. How they act near those recent swing highs will be critical to the future technical prospects. The HUI actually now has the stronger looking chart of the two.

Gold deliveries for April were pretty impressive today, the second day of the process, with a total of 1,441 contracts taken. That brings the total so far to 10,308 contracts or a bit over 1 million ounces so far. This is a nice pace and if it can be pushed on up to the 1.5 million mark, it will get the attention of the perma shorts. Open interest remaining in the April contract is a bit over 7,000 contracts so the potential exists to reach that mark but that would assume the majority of remaining longs will stand for delivery. I must admit the likelihood of such an event is rather low based on  previous history. Perhaps some fresh buyers will enter that contract and take some gold much as what happened to the thinly traded March contract last week. What also needs to happen is for the Comex warehouse numbers to decline. We need to see both heavy stopping of deliveries and strong drawdowns of the warehouse stocks. Barring that, any talk of Comex default is rather premature.

The commodity currencies, the Loonie, Aussie and Kiwi, were all lower today as crude oil continued its sell off. That brought algorithm-generated selling into the entire commodity complex with even the grains unable to add to yesterday’s strong gains as soybeans struggled to add to that big move higher off yesterday’s plantings intentions report. Unleaded gasoline was hit for an $.08/gallon loss at its worst levels today. That chart is now showing a bearish turn lower in both the 10 day and 20 day moving averages. Price remains above the 40 and 50 day however so the bulls still have the intermediate term advantage as long as those moving averages hold any further moves lower in price.

It is evident from today’s price action that a great deal of yesterday’s move up across the commodity complex was related to end-of-month and end-of-quarter positioning by both hedge and index funds as many markets lacked any noteworthy upside follow through. Losses in the first quarter in the commodity indices occurred once again but those losses averaged 9% compared to much larger losses in the third and fourth quarters of last year. It still appears to me that the commodity markets as a whole have put in a bottom.

Copper however continues to show remarkable resilience and bears close monitoring. Lumber, another forward looking market also experienced a great deal of buying. I find that interesting given what has been occurring among the homebuilders.

Bonds were rather subdued.

“YAWN!” – sums up most of the market action today.

Click chart to enlarge today’s hourly action in Gold in PDF format with commentary from Trader Dan Norcini