Morning Gold Market Report 8/24

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Compiled 08/24/12 6:00 AM (CT) Statistics: London Gold Fix $1,666.50 +$4.00 LME Copper Stocks 235,550 tons -1,600 tons GOLD MARKET FUNDAMENTALS: (6:00 AM CST) Clearly the gold market saw a large lift this week from easing prospects, which in turn seemed to be telegraphed by the release of the FOMC meeting minutes earlier this week. However, it is also possible that some of the gains in gold prices this week were the result of chatter about the US returning to a gold standard. On the other hand, the odds of a return to the gold standard are dramatically reduced by the difficulty of that process and because such a move could take power away from the government and from the US central bank. It is also likely that hope for additional easing from China contributed to the rally this week, but with Asian equity markets weaker overnight, off the lack of action on that front, it is possible that some gold longs might be discouraged today by the lack of action. On the other hand, some of the gains in gold this week seemed to be the result of revived inflationary fears, in the wake of sharp gains in energy and grain prices. At least to start today, outside market conditions for gold were mixed with adverse currency market action offset by somewhat supportive grain and energy price action. With the trade widely expecting to see fresh easing from the US Fed sometime ahead, the Durable goods report later this morning, might not dramatically temper the expectations for easing, unless the durable goods release, shows a bigger than expected gain later this morning. Comex Gold Stocks were unchanged at 10.844 million ounces. Gold stocks have declined 13 of the last 20 days. OUTSIDE MARKET DEVELOPMENTS: (6:00 AM CT) Asian stocks were weaker overnight, with the Shanghai composite closing at some of the lowest levels in several years. Apparently investors have become impatient with the wait for definitive easing action from the PBOC and there also seemed to be renewed concerns toward the Euro zone in Asia into the weekend. With dovish comments from a Fed member again overnight and a major US bond fund manager suggesting that QE3 was basically a done deal, it is possible that a large portion of the "buy the rumor" action off the US easing theme has been put in place for now. European shares were generally lower, despite relatively low sovereign debt rates overnight. The US report schedule today includes durable goods and expectations call for a modest rise in that reading.

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