Compiled 08/16/11 6:00 AM (CT) Statistics: London Gold Fix $1,739.00 +$41.00 LME Copper Stocks 465,275 tons +4,675 tons GOLD MARKET FUNDAMENTALS: (6:00 AM CST) It appeared as if the gold market saw a lift on Monday afternoon from comments from the Fed's Lockhart who suggested that the Fed's balance sheet could be used "quite extensively" if needed to spur the US economy. With the Fed also suggesting that excess reserves in the US were above $1 trillion and that more easing couldn't be ruled out, it is quite possible that some of the gold buying on Monday afternoon was inflationary buying interest. However, even the macro economic uncertainty crowd was emboldened by comments from the Fed's Lockhart yesterday who suggested that the US economy was slower than the Fed expected it to be and that the Fed wanted to avoid inadvertently tightening. In conclusion, the economic condition according to one Fed member remains very volatile and that in turn has lent a fresh measure of support to gold prices. With some of the early weakness yesterday the result of expectations of something constructive from the French and German meeting later today, it would seem that sentiment is becoming more doubtful that something significant will be settled upon. The German leader has been seeing domestic pressure to reduce the cost of Euro zone participation and therefore some traders could see the meeting result today as a rather significant crossroads. In fact disappointing German GDP data overnight probably added to the macro economic uncertainty in the gold market and that in turn could make the US housing starts and permits data even more important. News from fund managers on their holdings of gold was mixed with some key managers trimming their holdings and others holding steady. However, a noted gold futures analyst overnight has suggested that it was time to re-enter gold on the long side. Comex Gold Stocks were 11.570 million ounces up 29,231 ounces. Gold stocks have declined 11 of the last 20 days. Comex Gold stocks are at their highest levels in the past 10. OUTSIDE MARKET DEVELOPMENTS: (6:00 AM CST) While equity markets in Asia were mixed during overnight trading, stock indices in Europe are generally weaker this morning. Early indications are that US equity markets will open with moderate losses later on today. The US Dollar is stronger against most major currencies this morning, although posting a loss versus the Swiss Franc. German Chancellor Merkel and French President Sarkozy are having a summit meeting in Paris today to discuss methods to support the Euro zone during the current debt crisis. An official Chinese paper has called for that nation to widen their trading bands for the Yuan versus the Dollar. German GDP during the second quarter was up 0.1%, much lower than expected. UK CPI during July was up 4.4% year-on-year, higher than forecasts. Euro zone GDP during the second quarter was up 0.2%, lower than expectations. Major US economic numbers to be released this morning include July Housing Starts along with July Import & Export prices at 7:30 AM, July Industrial Production and Capacity Utilization at 8:15 AM, and private surveys of store sales released during the session.
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