Morning Gold Market Report

Compiled 05/18/11 6:00 AM ( CT ) Statistics: London Gold Fix $1,491.25 -$4.25 LME Copper Stocks 469,050 tons +225 tons GOLD MARKET FUNDAMENTALS: (6:00 AM CST) It is somewhat surprising to see the gold market generally discounting the US budget/debt battle. Certainly the lack of an aggressive austerity program from the US could rekindle the safe haven track in the gold market, but in markets like US Treasuries, the debt issue has so far been a non starter. In fact, even in the face of news overnight that the "Gang of 6" (those negotiating the budget) might have reached an impasse but that hasn't initially cast much of a shadow over US financial markets. Some players are suggesting that news is contributing to the slide in the Dollar this morning and therefore that political news might be contributing to the rise in gold prices. For some gold players, the Dollar needs to fall below last week's lows to shift the currency market action back into a definitive bull mode for gold prices. However, gold is also seeing some support from fresh Indian buying overnight, which suggests that a weaker Dollar, rising energy and equity markets have indeed improved the outside market environment for gold somewhat. The gold market appears to have handled talk of hedge fund liquidations from early in the week, as June gold to the early Wednesday highs is already sitting as much as $26 an ounce above yesterday's lows. There is no scheduled US data this morning of note but there is an FOMC meeting minutes release later today and that might be the event of the day. Comex Gold Stocks were 11.160 million ounces up 3,448 ounces. OUTSIDE MARKET DEVELOPMENTS: (6:00 AM CST) While equity markets in Asia and Europe were generally stronger during overnight trading, early indications are for US equity markets to open today's session with moderate gains. The Dollar is slightly weaker against most of the major currencies during overnight trading, although posting a gain versus the Pound. The Prime Minister of Japan stated that the Japanese will allow some nuclear reactors to resume operations provided they meet emergency safety measures. The Chinese central bank said that their foreign currency purchases during April were down almost 25% from the previous month's levels. UK Unemployment during March was 7.7%, lower than market expectations. There are no major US economic numbers to be released this morning. However, the Federal Reserve's Open Market Committee will release the minutes of their April meeting at 1:00 PM. In addition, Fed Regional President Bullard will give a speech this evening.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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