DAN NORCINI'S COMMENTS ON JSMINESET.COM TODAY

Once again, as we have seen in the recent market action of the past few trading sessions, gold found strong buying emerge on a price retracement or dip lower. The buyer(s) that have been making their presence felt are apparently still active and challenging the bullion banks.
One of the things I have noticed is that the open interest levels are rising indicating that this buying is not short covering but rather new longs being established. Even at that, the overall open interest total is still not at the 400,000 level. You might recall that the peak reached in this category was nearly 594,000 back in January 2008. Front month gold topped out at $936 that month followed by a run above the $1,000 level in March that same year when it reached $1,033.39 before dropping all the way down below $700. The present state of the market therefore is quite remarkable given the current price level near $970 and open interest some 200,000 contracts shy of the record.
One of the reason for the peak in open interest back early last year was the spreader category grew quite large. Currently they are rather small by comparison. Still, even after allowing for the spreaders, open interest readings are at levels that can support a much stronger move higher in gold should momentum funds attract even more followers to their cause.
Technically, resistance lies first at yesterday’s high near $973. A pit session close above this level targets $980 which is the last substantial barrier before a run into the $990’s and possibly $1,000.
Initial support is near today’s session low followed by a bit better support centered around $955 – $953. Below that is $942 – $940.
I am in awe of what copper is doing and still do not quite know what to make of that market except it is obviously running higher on the “improving global economy” theme. It simply will not break lower and there are still a large number of funds trapped on the short side in this market that have the capability to propel it even higher if the squeeze continues.
Crude oil is mirroring the action in the Dollar inversely. Rising crude oil along with natural gas pretty much is the death knell to the deflationists. The only thing saving their bacon right now is that the bonds have not yet broken down of their larger trading range. We will have to see what happens to them if they should fall back down to the 115 level.
The Dollar still looks like it is headed down to near 76.