Daily Metals Newsletter

2/10/2016- Good morning from Chicago -

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52 Week High 1238.7 on 02/11/15

52 Week Low 1046.6 on 12/03/15

20 Day MA 1125.4

50 Day MA 1094.7

100 Day MA 1111.2

52 Week High 17.856 on 05/18/15

52 Week Low 13.620 on 12/14/15

20 Day MA 14.450

50 Day MA 14.207

100 Day MA 14.680

52 Week High 1215.4 on 02/13/15

52 Week Low 811.4 on 01/21/16

20 Day MA 869.2

50 Day MA 866.5

100 Day MA 903.3

PRECIOUS METALS COMMENTARY02/10/16

Caution and profit taking ahead of Yellen testimony

OVERNIGHT CHANGES THROUGH 6:05 AM (CT):GOLD -15.80, SILVER -30.40, PLATINUM -15.80

Early Gold Change -$5.50 from the prior session.LME Copper Stocks 227,300 tons -825 tons Shanghai copper stocks +17,653 tons to 213,090 tons.

OUTSIDE MARKET DEVELOPMENTS: US and European equity markets took a positive turn during the early morning hours and are reflecting an improvement in sentiment. The Japanese Nikkei was the overnight laggard, down 2.5% and falling to the lowest level since October 2014 as it was hurt by a stronger Yen in the wake of recent market uncertainty and volatility. Sentiment reversed in favor of the bull camp in early European trading, with the German DAX up by more than 2.5% early. This comes on reports that Deutsche Bank considers bond repurchases to support security values and willingness by the Greek government to explore reform and pension plan improvements. Focus in the market turns to testimony by Fed Reserve Chair Janet Yellen in front of Congress this morning and for more clarity on the interest rate outlook.

GOLD / SILVERWhile the trade is not looking for a startling announcement from Fed President Yellen when she testifies in front of the US Congress starting on Wednesday, the market is nonetheless cautious going into it. There seems to be a consensus that she might at least acknowledge that the US and global economic situations are not as strong as hoped, and this, along with sharp breaks in crude and equities, has helped fuel the decline in the dollar and the rally in gold and silver since the December. On Tuesday, the flight to quality trend continued as equities fell while crude oil came close to taking out its January low. However, some of the safe haven flows seemed to be heading towards the yen, Swiss franc and US Treasuries, which approached the March 2015 all-time highs. High cash gold prices, the Chinese New Year and Indian politics are keeping bullion demand down, and this could pressure the market, but only if economic data improves and outside markets, especially crude oil, stop falling. Indian bullion dealers are offering $25 discounts off the official price. Indian gold traders are hoping the government will cut the 10% import duty in their next budget, which will be presented on Feb 29th, and this is keeping them out of the market. Chinese markets are quiet as well due to their week-long holiday. We could see some additional volatility with the Fed Chairman's testimony over the next couple of days. The trade seems to have already built in a delay in rate hikes and the worst fears about the economy, but if crude oil manages to break below the January lows and then collapse, it would probably bring more flight to quality buyers into the gold market. But after the steep rallies of the past five weeks, even a sharp correction would still leave the uptrends in gold and silver intact. Gold fund interest faded a bit yesterday, as SPDR Gold Trust ETF daily holdings fell 1.5 tonnes to 702.0 tonnes, their first decline after six straight increases.

PLATINUMAlthough global risk sentiment remains lukewarm at best amd carryover strength from precious metals has run out of steam, platinum and palladium have managed to hold their ground in close proximity to their recent highs. The PGM sector shifted back into a divergent price action mode on Tuesday, with platinum benefiting from potential South African supply anxiety to reach its highest price since early November, while palladium posted a modest loss. The potential for supply disruptions in South Africa continues to provide underlying support to platinum, with comments from Lonmin that they would be closing mine shafts and cutting jobs over the near future adding to the news of Amplats job cuts earlier this week.

TODAY'S MARKET IDEAS: For the moment the market seems to be focused on Yellen's testimony, but that might be just an excuse for a correction in an overbought market. Be on the lookout for further weakness if the Fed Chair does not at least hint at a delay in rate hikes. A key support level in April gold today could be the Friday high of $1175, but an ultimate support area could be down at the 50-day moving average, currently at $1,133.70, almost $50 below the overnight lows. March silver fell below the 50-day moving average overnight, and that level, $15.178, could be a bull bear line today. Look for support at $15.065, with an ultimate target down around $14.55 if the selloff continues. Support for April platinum is down at $916.00 while March palladium will find support at $506.00.

NEW RECOMMENDATIONS: None.

PREVIOUS RECOMMENDATIONS: None.

COPPER COMMENTARY02/10/16

Copper remains on the defensive this morning due to bearish supply news

GENERAL: Bearish supply news has added to a negative demand tone for copper and has led to prices heading to a new January low early this morning. Copper remained on the defensive for much of Tuesday's session as it broke out below uptrend channel support and ended up posting heavy losses by the close of trading. Although China's markets remain closed for a week-long Lunar New Year holiday, concerns over their economy (as well as its impact on emerging market nations) has been a major source of pressure on copper this week. News that Freeport McMoRan will get a fresh 6-month export permit from Indonesia has weighed on prices, as that will put additional supply back onto the market. The Chilean government reported that their copper output during 2015 was only fractionally above the previous year's levels and would remain steady this year, undercutting ideas that the recent low prices would lead to supply cuts from the major mines there.

MARKET IDEAS: The bears will maintain the upper hand in copper due to recent bearish supply developments, as the market may be waiting on the reopening of China's markets next week before giving any benefit of the doubt to prospects for an improving economic outlook there. Near-term resistance in March copper is at $2.0670, with support seen at $2.0110 and $1.9810 as the next downside target.

NEW RECOMMENDATIONS: None.

PREVIOUS RECOMMENDATIONS: Long the March copper $2.30/$2.40 bull call spread at 205. Hit our objective of 100 on the short $2.40 call. * Use an objective of 150 on the long $2.30 call.

Daily Technical StatisticsNote: Calculations based on previous day session closes. Data sources can and do produce bad ticks. Verify before use.

CMX GOLD (APR) 02/10/2016: Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The market's close above the 9-day moving average suggests the short-term trend remains positive. The market tilt is slightly negative with the close under the pivot. The next upside objective is 1204.0. The market is approaching overbought levels with an RSI over 70. The next area of resistance is around 1195.4 and 1204.0, while 1st support hits today at 1182.0 and below there at 1177.3.

CMX PLAT (APR) 02/10/2016: Studies are showing positive momentum but are now in overbought territory, so some caution is warranted. A positive signal for trend short-term was given on a close over the 9-bar moving average. The close over the pivot swing is a somewhat positive setup. The near-term upside objective is at 949.75. The 9-day RSI over 70 indicates the market is approaching overbought levels. The next area of resistance is around 942.20 and 949.75, while 1st support hits today at 924.80 and below there at 914.95.

CMX SILVER (MAR) 02/10/2016: Momentum studies are trending higher but have entered overbought levels. A positive signal for trend short-term was given on a close over the 9-bar moving average. It is a slightly negative indicator that the close was under the swing pivot. The next upside target is 15.561. With a reading over 70, the 9-day RSI is approaching overbought levels. The next area of resistance is around 15.387 and 15.561, while 1st support hits today at 15.123 and below there at 15.032.

***This report includes information from sources believed to be reliable and accurate as of the date of this publication, but no independent verification has been made and we do not guarantee its accuracy or completeness. Opinions expressed are subject to change without notice. This report should not be construed as a request to engage in any transaction involving the purchase or sale of a futures contract and/or commodity option thereon. The risk of loss in trading futures contracts or commodity options can be substantial, and investors should carefully consider the inherent risks of such an investment in light of their financial condition. Any reproduction or retransmission of this report without the express written consent of The Hightower Report is strictly prohibited. Violators are subject to a $15,000 fine per violation.

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