OUTSIDE MARKET DEVELOPMENTS: It would seem like the outlook for the global economy remains upbeat into the action today, as global stock prices overnight generally added to the recovery effort seen in the US markets on Thursday. In fact, the markets seem to be poised to discount a widely anticipated 1.5% decline in the US 2nd quarter GDP reading. While the US GDP reading will be a major focal point of the gold and silver trade this morning, the markets will also be watching the overall direction of the stock market. While Chevron (a Dow component stock) is scheduled to report earnings before the US stock market opening today, many traders doubt that the markets are going to take that much direction from the Chevron earnings. The trade will also see some potentially important news from a couple regional NAPM reports and from a US employment cost Index reading. At least in the early action this morning, it seems as if the US equity markets are set to come into the Friday trade with a ongoing favorable view on the economy and that in turn could mitigate the impact of the anticipated decline in the US GDP report.
GOLD MARKET FUNDAMENTALS: The gold market comes into the Friday morning action with a slightly positive early bias in prices that mostly looks to be a function of ongoing recovery hopes and certainly because of a weaker bias in the US Dollar. Most of the overnight fundamental news in the gold market would seem to have come from AngloGold Ashanti, which confirmed lower annual gold production. However, AngloGold also suggested that gold prices were likely to remain range bound in the coming months, but that gold prices might have the ability to rise to $1,000 an ounce sometime next year. The company also suggested that they still planned to finish unwinding their hedge book by 2014, and some traders think that a pattern of hedge unwinding throughout the gold mining industry will reduce the overhead resistance in the gold market. Other traders see the unwinding of hedge positions by the gold industry as a sign of an impending top, as bullishness among gold company executives is thought to be a sign of over extended bullish sentiment. With the gold market and a host of physical commodity markets this week, seemingly embracing the “recovery” bias, the US GDP report would seem to be a critical report and therefore traders should expect some increased price volatility around that report this morning.