Silver Deliveries picking up - Gold rollovers continue

As March draws to a close, deliveries in the March Silver contract are ramping up. A total of 290 deliveries were posted for tomorrow with Merrill Lynch the biggest issuer for customers while JP Morgan was second also issuing for both customers and their own accounts.

Barclays continues to gobble up the silver for its clients.

The total deliveries for the month of March has thus far been 1,707. Open interest remaining in the March contract is 330 contracts.

Notable is the fact that the March silver contract, which recently had been trading at a small premium to the May is now back to a discount of about a cent and a half. That pretty much means any fireworks related to the delivery process for the rest of March are over. These front month spreads have been extremely volatile but they have not moved in the direction that would indicate any short squeeze is forthcoming. Such an event would have been marked by a steady and continuous widening of any premium that March would have held over the May.

Rollovers continue in the gold pit with traders' move into the June being accompanied by a further reduction in open interest as longs hesitate to push the market higher as the end of the quarter draws near.

Both gold and silver are weakening as they head into the close of pit session trading. We'll see if they are able to garner any strength in the after market hours. The end of the month is currently is working against the bulls. It will be up to physical market buyers to keep a floor of buying support under the market until the speculators decide to return to the long side more aggressively.

Strength in the HUI might be the result of hedge fund unwinding of ratio spread trades due to the move higher in the broader US equity markets.

Dollar strength is the result of downgrades to Portugal and Greek debt which is weighing slightly on the Euro. Additionally the Yen is seeing a strong bout of selling pressure today. Even at that, the Dollar is only marginally higher.

The long bond is looking heavy today.