Compiled 07/12/12 6:00 AM (CT) Statistics: London Gold Fix $1,565.50 -$11.00 LME Copper Stocks 251,375 tons -975 tons GOLD MARKET FUNDAMENTALS: (6:00 AM CST) Technically August gold forged a fresh downside breakout on the charts overnight and that would seem to suggest that the market is at least partially tracking a deflationary/slowing mentality. With euro zone May Industrial output overnight falling down to the lowest level since the end of 2009 and the markets mostly disappointed with the lack of near term easing prospects from the US Fed, the bears would seem to have the edge at the start of the US Thursday trade action. While the gold trade hasn't paid that much attention to classic supply side news lately, gold prices might draw some limited support from news that South African gold production declined by nearly 3% in May! Countervailing the global slowing view is partially upbeat economic views from the BOJ Tankan survey especially since the BOJ attributed the partial improvement in retail activity to falling gasoline prices. Another minor bright spot overnight was talk that Indian gold demand showed signs of improving this week and some traders think that lower gold prices are starting to attract some interest in that region. With the world view favoring ongoing slowing and global equities mostly weaker to start today, it might be difficult for minimally positive US claims data to foster a sustained improvement in sentiment this morning. In fact, with the dollar sitting just under its highest levels of the last year, the bull camp in gold has to keep a very close eye on the action in the currency markets today. Comex Gold Stocks were 10.811 million ounces down 203 ounces. OUTSIDE MARKET DEVELOPMENTS: (6:00 AM CST) Hong Kong equity markets were sharply lower overnight and fell to the lowest levels in a month, but the mainland Chinese market managed a modest rise on the most active volume in more than a month. European equity markets were also weaker to start today, as investors there were disappointed with the lack of easing prospects from the US Fed on Wednesday afternoon. In fact, many global equity markets were weaker overnight off the idea that the US Fed would need to see even more weakness before taking action. In short, the world is mostly anticipating further slowing evidence ahead and that might assist the trade in discounting a minor decline in US claims data later this morning. In fact, with an expected decline in US Import prices to be released today, it is possible that minor improvement in the claims data will be mostly countervailed. There will also be a Fed Budget statement later in the session but the trade isn't expecting much of a surprise from that report.
Join the Discussion