Compiled 07/05/12 6:00 AM (CT) Statistics: London Gold Fix $1,616.75 +$6.25 LME Copper Stocks 252,725 tons -800 tons GOLD MARKET FUNDAMENTALS: (6:00 AM CST) Clearly the gold market was at least partially lifted earlier in the week off ongoing expectations of coordinated easing and now that focus will be tested by the end of an ECB meeting later this morning. Gold was given an added lift this morning by a surprise Chinese deposit rate cut but for some that means the gold trade has seen almost all of the anticipated central bank action and then some, which in turn could mean gold could face a sell the fact situation later today. Most players are already anticipating a 25 basis point reduction in EU rates, while a smaller portion of the trade thinks a 50 basis point reduction is possible. While there is a BOE meeting this morning, expectations for action from the BOE is clearly less than the expectations in place for action from the ECB. The trade generally expects the BOE to expand its asset purchase program by 50 billion Pounds and that might be partially baked into most markets already. One might have expected gold and other physical commodity markets to be higher this morning, in the wake of lower Spanish yields overnight, but adverse currency market action and mixed global equity markets seemed to diffuse the mostly bullish outside market action that helped to lift gold prices earlier in the week. Gold Fields appears to have produced slightly less gold in the most recent quarter, than the same quarter last year, but the gold market recently hasn't been overly interested in physical supply side developments. From initial expectations today's scheduled data might present a mixed picture on the US economy with the ISM figures expected to show minor weakness and the claims figures potentially showing minimal improvement. Comex Gold Stocks were 10.811 million ounces down 25,084 ounces. Comex Gold Stocks are now at the lowest levels since 09/20/2010. Gold stocks have declined in 12 of the last 20 days. OUTSIDE MARKET DEVELOPMENTS: (6:00 AM CST) Chinese equity markets were mixed overnight, with Hong Kong shares higher and mainland Chinese shares weaker. In general Asian equity markets were mixed with some ongoing anticipation of another Reserve Rate Requirement reduction from China providing some markets with a lift. However, late breaking news that China cut deposit rates only seemed to add marginal gains to the metals markets this morning. European shares were generally higher overnight (with the exception of the IBEX) and that was probably the result of declining Spanish yields and hopes for an ECB rate reduction. At least in the early action today, the focus of the trade is likely to center on the ECB meeting and results, but that focus will be at least partially divided by the impending US data flows. The US scheduled report slate today will officially kick off the monthly payroll report watch, as an ADP job report will be seen along with weekly initial and ongoing claims figures. Estimates for the early private jobs report today call for a gain of 100,000 to 110,000 jobs and the markets will probably extrapolate that data for a fresh round of estimates on the official Friday US payroll report. Also out from the US today is an ISM Non Manufacturing report and a private layoff report.
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