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OUTSIDE MARKET DEVELOPMENTS: While the UK saw a rise in nationwide home prices overnight, there doesn’t appear to be a definitively up beat view toward the global economy in place this morning. In fact, the market saw lower Euro zone price readings, softer German retail sales figures and a sharp slide in Japanese housing starts and that would seem to leave a slightly less up beat macro economic view in place than was present in the prior trading session. However, the Dollar action wasn’t definitive and therefore the impact on gold and silver prices from the currency markets early this morning is mostly limited. The market is seeing weaker initial equity prices and that might be considered a slight negative to the precious metals markets. The US will present Personal Income and Personal Spending readings this morning and the expectations for those readings are relatively benign. The trade will also see an important inflation reading from the US PCE index but with expectations calling for only a half percent gain in that reading, the metals markets probably won’t come away from the news with a huge inflation reaction. There are also some regional purchasing manager’s reports out later in the morning trade today, but the overall expectation today seems to be that the US numbers aren’t going to offer up anything impressive or surprising.
GOLD MARKET FUNDAMENTALS: While the direction of gold prices recently has seemingly been trained on the outlook for the US and global economies, the gold trade continues to see ongoing developments from an anticipated minor sale of Russian gold. The trade also saw a series of higher gold production figures from some key miners overnight, but that news doesn’t appear to be applying distinct pressure to gold prices. On the other hand, if the outlook toward the economy deteriorates again it is possible that the bear camp might try to play up the news of rising physical gold production. Clearly gold has behaved like a physical commodity this week, by falling sharply in the face of weak numbers and weak equities at the start of the week. However, the gold market did manage to rise sharply yesterday in the wake of favorable US numbers and very favorable equity market action. On the other hand, choppy to weak international equity market action overnight and somewhat slack international data flow overnight might serve to increase the importance of the US number flow later this morning.
SILVER MARKET FUNDAMENTALS: The bulls will tout December silver’s capacity to rise above the prior session’s high, while the bear camp will suggest that the silver market was unable to hold that pulse up attempt. With equities showing initial weakness and copper prices also under a bit of early pressure, the bear camp would seem to have an edge in the outside markets category. However, the Dollar action is mostly nondescript and unless the US numbers manage to offer up something slightly better than expected, it would not appear that the broad based economic optimism that was seen in the prior trading session will become a dominating view today. Nonetheless, the sharp recovery move in the prior trading session probably took away some of the bear’s confidence, that was built into the silver market early in the week. For the time being, the direction of silver prices might be largely influenced by the direction of US equities, as the scheduled US data today isn’t first tier data and the expectations for the data are pretty nondescript.
PLATINUM: Like gold and silver prices, it would seem like platinum over reacted to the favorable shift in economic sentiment. While we don’t expect to see an aggressive slide in platinum prices today, the path of least resistance might be set to point downward in the wake of nondescript US data and initially weak equity prices. In short, without a surprise bullish economic development, we see a bit of back and fill action in the platinum market today.
