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OUTSIDE MARKET DEVELOPMENTS: With international equity markets extending the recovery action seen in the US equity markets yesterday afternoon and mostly favorable economic news seen again overnight, it would seem like most physical commodity markets are benefiting from favorable bids into the early US Friday action. However, the Dollar wasn’t definitively lower in response to the ongoing strength in equities and that might temper some of the overall bullishness for gold and silver prices in the early going today. On the other hand, several US equity market measures seem to be poised to challenge highs for the year later today and with the trade generally expecting favorable US economic data flows this morning, the bull camp in precious metals seems to have more outside market information in its corner than the bear camp. While the trade generally expects to see favorable Personal Spending and Income readings, that potentially positive flow of economic news might be countervailed in the event that US inflation readings this morning are somewhat soft.
GOLD MARKET FUNDAMENTALS: While the gold trade might look to garner some support from news that a Platinum strike in South Africa was set to continue, the company and the union were not that far apart in their negotiations. Furthermore, unless the strike at the Impala mine were to spread to other mines, it would seem like the gold trade will remain mostly uninterested in the potential supply side threat. Clearly the gold market remains focused on the direction of the equity markets and therefore the meanderings of the US Dollar today might not be that important to the gold trade. Some traders suggest that it could take a slide in the September Dollar index below the recent low of 77.81, to make the action in the currency markets critical to the gold trade. Most of all, the gold market this week seems to be paying a lot of attention to classic physical commodity market fundamentals and that in turn suggests the bull camp in gold is still heavily reliant on a continuation of the recovery view.
