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OUTSIDE MARKET DEVELOPMENTS: With a slightly positive early bias in some global equity markets, the fear of slowing seen in the prior trading session seems to be tempered slightly. A slightly firmed early bias in energy prices and also in other physical commodities seems to be lending some minor support to gold prices in the early action today. However, there is some divergence within the metals complex this morning and that would seem to suggest a lack of a definitive theme among the metals markets. In the overnight action, the trade saw a slightly up beat Euro zone retail sales reading and the trade also noted a surprise jump in UK house prices and that would also seem to temper the renewed slowing fears that seemingly surfaced in the equity markets in the prior trading session. The US economic report slate today is somewhat active, with initial and ongoing claims data and also some US Treasury supply announcements. With the US monthly Non Farm payroll report due out on Friday morning, the ongoing claims data from the US this morning will probably take on an added measure of importance today.
GOLD MARKET FUNDAMENTALS: While gold prices are showing some minor early strength in the early US action, part of that bullishness is lost due to choppy and slightly weak early price action in silver. With the overnight trade in gold watching currency market action closely, it is possible that a portion of the gold trade today will see the 79.69 Wednesday morning high in the June Dollar Index as a very important price level today. It should also be noted that weekly Russian Gold and Currency reserves rose to the highest level since January 9th and that could suggest to some, that Russia is seeing its financial condition improved by the rise in oil prices and that in turn might reduce the threat of Russian gold sales. It does appear as if gold has reestablished a somewhat positive correlation with US equity prices this week and it also seems as if gold price strength is at least partially dependant on up beat macro economic sentiment. In fact, a number of gold traders seemed to liquidate long positions in gold early this week, because of fears of slowing, while another group of longs might have liquidated positions because of Dollar strength. Another group of players suggested that the liquidation pressure in gold early this week, was the result of the failure to hold up trend channel support levels on the charts.
