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OUTSIDE MARKET DEVELOPMENTS: With a slightly higher overnight equity market bias and a weaker US Dollar the bias toward precious metals prices has seemingly improved from the view that was in place on Monday morning. It is also possible that very favorable German ZEW readings overnight served to tamp down the resurgent macro economic slowing fears that seemed to dominate the headlines over the prior two trading sessions. The bull camp might also be getting a slightly positive draft off gains in the energy complex in the early action today. While some analysts suggested that the Home Depot earnings this morning were positive, the initial reaction in the equity markets was a slight setback in stock prices. With the US Housing Starts and Permits report due out later this morning, the markets are probably reserving their judgment on the direction of the economy. Initial expectations call for a modest improvement in both housing starts and permits figures, with the trade also expecting minor gains in the PPI report.
GOLD MARKET FUNDAMENTALS: The gold market seemed to get a mixed bag of classic fundamental news overnight, with the silver trade seeing evidence of lower July Indian gold imports, but that potentially negative result was seemingly tempered by other suggestions that August gold demand in that country would improve. In the end, talk about the Indian gold demand season hasn’t been as supportive as some in the bull camp might have liked to see, but the gold trade overall just doesn’t seem to be that interested in classic supply and demand developments. With October gold prices this morning sitting roughly $8 an ounce above the prior session’s lows, it would appear that a minor bounce in equities and a weaker US Dollar has at least temporarily put the sellers off balance. Like a host of other physical commodity markets, the gold trade today probably needs something positive from the economic front to keep the negative bias from regaining control over prices.
