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Morning Gold Fix: June 23, 2010

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Gold rallied Tuesday, recovering $7 from the washout on Monday. Gold continued its uptrend in Asian and European trading and is up about $3 of the day. Traders are keeping their ears to the ground ahead of options expiries tomorrow. The Federal Open Market Committee will announce any changes in interest rates this afternoon and while there is almost no chance of it moving interest rates the accompanying statements they release could influence market prices.


Pin Risk

July options Expire tomorrow in Gold and Silver. Much has been said about options pin risk, much of it incorrect. We hope to shed some more light on the whats and whys  and hows of this phenomenon tomorrow. In the mean time accept this analysis:

· Absent other exogenous factors, expect the gravitational pull of the 8,871 lots of open interest at the 1250 strike to exert some force on the market.

· Should the market break through or away from the gravitational force of the 1250, look to the next strike with major open interest as a target

· Don’t expect much from this expiration. July is a serial options month and has only been on the board for 90 days tops. It has not had the life cycle to accumulate and consolidate short open interest in the strong hands (more on that tomorrow)

Pin Risk

August gold was up 3 to $1243.8 per 100 troy ounces as of 8:25 AM EDT, this morning. The September U.S. dollar index was down .133 to 86.28. July platinum was down 11.2 to $1581.8 per 50 troy ounces. Silver was down 2.2 cents to 18.88.

- Elizabeth Thawne