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OUTSIDE MARKET DEVELOPMENTS: While the metals markets will be presented with a series of potentially important US economic readings this morning, it is possible that ongoing weakness in the US Dollar will only serve to partially countervail or offset the typical bearish influence of the soft US numbers. On the other hand, given the weekend G20 meeting, slightly higher US equity prices this morning and an impending US FOMC meeting later this week, it is possible that the flight to quality crowd in the gold and silver trade will be somewhat fearful of upcoming developments. In fact, given that the strength in the equity markets clearly extends strength from last week it is possible that equity market action will siphon off some interest from gold and silver, especially since the metals are also being presented with noted weakness in oil prices this morning. Apparently the gold and silver markets aren’t seeing much support from the ongoing concerns being expressed by Chinese officials regarding the massive amounts of Chinese capital sitting in US Treasury instruments.
GOLD MARKET FUNDAMENTALS: While the gold market saw evidence over the weekend of another record gold held in trust reading, at a major gold derivative instrument, it would not seem like investment interest is providing the bull camp with its usual support for prices. With the World Gold Council over the weekend noting a large increase in UAE gold sales values, the gold market could have embraced a positive demand side story, but apparently the bear camp has a bigger following into the US opening today. In fact, with a clear downside breakout taking place in the US Dollar, one might have expected some currency bulls to be stepping forward with buy orders, but apparently the currency influence is not thought to be a sustainable development or perhaps a significant enough development yet to re-channel sentiment in the precious metals markets this morning. In the end, financial sector uncertainty is still present but overall anxiety seems to be ebbing a bit in the wake of the persistent strength in financial sector shares. With the US FOMC meeting not expected to yield any official developments until much later in the week, it is unlikely that expectations from the Fed meeting will be a major issue in the action today.
