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OUTSIDE MARKET DEVELOPMENTS: One might have expected the gold market to be supported this morning by what seems to be a noted slide in the US Dollar. However, it would also seem like global equity markets are higher and some of the strength in those markets seems to be the result of hope that the latest US housing plan will have some positive influence. In other words, some markets overnight are suggesting that the US housing plan is serving to temper the flight to quality or safe haven mentality. However, it was also noted overnight that the Japanese economy continues to worsen dramatically and that revelation follows a similar assessment or downgrade in the US economy from the US Federal Reserve Chairman on Wednesday afternoon. Apparently the Euro, Pound and Canadian are garnering strength from the global equity market bounce and perhaps even from the latest US “plan” and that seems to have created a partially bearish environment for the precious metals markets into the US opening today. However, the US economic report slate is rather active this morning, with the weekly claims data generally expected to show some fresh record levels and recently the metals markets have been undermined by soft US data.
GOLD MARKET FUNDAMENTALS: Apparently news of fresh record holdings of by gold various derivative instruments is being discounted this morning in part because of a slightly positive attitude in global equity markets. Countervailing the fact that gold prices in Indian have seen a pattern of record levels, is news from the World Gold Council that Indian 2008 gold imports were down 14%. However, given the forward looking nature of the gold market and the persistent evidence of aggressive fresh investment interest off the extending global financial crisis, one could easily discount the Indian import news as old news. In fact, more recent Indian demand readings would seem to more than countervail the dismal 2008 import readings. In what could be considered a very minor negative development, Russian gold and currency reserves on the week actually rose and to some that might suggest that the financial turmoil in Russia is somewhat coming under control. One also doesn’t have to look very far to find other demand news that is easily capable of offsetting the 2008 Indian import news, as the World gold council overnight also noted a rapid and ongoing escalation in Chinese investment demand for gold. In short, there would appear to be several favorable demand stories in gold for each negative demand side story. However, at least in the early going today some markets are suggesting that macro economic anxiety has abated somewhat and that might temporarily favor the bear camp. On the other hand, turmoil and uncertainty have hardly left the building and therefore the bulls won’t be denied easily.
