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OUTSIDE MARKET DEVELOPMENTS: While the Dollar is lower, equity prices are higher and even energy prices are firmer, and they don’t seem to be favoring the bull camp in the gold market. Furthermore, it would seem like gold is slightly disappointed in the prospect of a US Treasury financial plan announcement, and that in turn would seem to suggest that the flight-to-quality metal gold is set to diverge with the quasi-industrial metals like silver, platinum and copper. While the silver market could have tracked tightly with gold this morning, it was able to generally favor positive ground in the early going, and that seems to leave it tracking the industrial or physical commodity market angles. Fortunately for those physical/industrial metals bulls, the overall market is seeing initial economic optimism off the anticipation of “the plan,” as the scheduled US economic data this morning might have been expected to undermine a host of physical commodity markets. In the end, optimism or quasi-euphoria that the US plan is finally going to be revealed today seems to have provided a distraction from the generally discouraging macroeconomic track.
GOLD MARKET FUNDAMENTALS: While the Indian gold market was inspired overnight by the events that lifted global equity prices, gold prices weren’t under significant early pressure. Perhaps a weaker US Dollar and the hope that the US plan would reduce the change of deflation and increase the prospects of inflation have provided the gold market with a partial underpin. Talk of some possible supply disruptions in Peru due to labor issues apparently wasn’t enough to countervail the light liquidation being seen from the flight to quality crowd, but some gold traders are holding out hope that a strong US stock market rally might put gold back in a position to play up the inflation card as it did in the wake of the Fed’s announcement to buy Treasuries. Countervailing the minor supply side threat and the hoped-for shift back toward inflation are concerns that scrap supply continues to flow to the market and that Indian buyers are still being somewhat put off by prices. Another group of traders might be watching for a slide below a couple of critical points in the June Dollar index, 83.64 (a somewhat important closing value from last week) and 83.28 (which was a potentially critical low from last week). However, while Dollar is showing signs of follow-through weakness, the gold trade doesn’t seem to be poised to fully embrace Dollar weakness yet as a mainstay fundamental.
