Compiled 07/03/12 6:00 AM (CT) Statistics: London Gold Fix $1,608.50 +$12.25 LME Copper Stocks 255,175 tons -1,125 tons GOLD MARKET FUNDAMENTALS: (6:00 AM CST) With the overnight rise August gold prices have managed an upside breakout, with at least a portion of the gains overnight coming off Chinese central bank action and another portion of the gains probably coming from the anticipation of easing action from other central banks. A portion of the trade is anticipating further easing from the ECB on Thursday, especially in the wake of the noted slide in European inflation data overnight. The gold market might be somewhat held back by evidence that gold derivative investment has remained soft despite the recent show of strength in gold prices which have surprisingly mounted a 3 day gain of roughly $59 an ounce. While a major European bank analyst overnight left a bullish long term gold price forecast in place, the upside targeting in that forecast was revised a touch lower for the second half of this year. While it is possible that gold is garnering some lift from news of a gold mine closure due to a recent fire, the gold market recently has been more interested in physical and investment demand than it has been on relatively minor supply side setbacks. With the gold market this morning focused on the prospect of more central bank easing directly ahead, it is possible that the bull camp will need to see soft US data to extend the upward march on the gold charts. Comex Gold Stocks were 10.837 million ounces up 4,975 ounces. Gold stocks have declined in 11 of the last 20 days. OUTSIDE MARKET DEVELOPMENTS: (6:00 AM CST) With the exception of the Australian equity market, Asian equities were all higher overnight off China's latest attempt (a RRR reduction) to stir their economy. European shares were also higher overnight off ideas that the ECB might be poised to reduce interest rates Thursday in an attempt to cushion the European economy against an ongoing wave of softening global activity. Overnight Euro zone May PPI showed a rather surprising decline of 0.5% and for some that stokes fears of a deflationary spiral. The US scheduled report slate today will present a US Factory orders report, US auto sales figures and a New York ISM Business Index reading. The trade expects a minimal gain in auto sales and also from the Factory orders data but those reports aren't likely to markedly improve overall sentiment.
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