Morning Gold Market Report

Compiled 05/27/11 6:00 AM ( CT ) Statistics: London Gold Fix $1,525.00 +$3.50 LME Copper Stocks 469,475 tons +1,250 tons Shanghai Deliverable stocks were 90,108 tons -15,357 GOLD MARKET FUNDAMENTALS: (6:00 AM CST) With some modest strength in Asia overnight and some weakness in the Dollar to start the Friday morning US gold trade, the bull camp probably feels like they have a slight edge from the outside market action. While the Greek debt issue wasn't throwing off significant and overly fresh news overnight, that issue remains a key issue in the market and with the US economic numbers this week creating some doubt for the standing of the Greenback, the safe haven mantra is credible once again. In fact, rumblings from the IMF this week, about potentially withholding the next aid payment to Greece in June, has probably left the Euro debt issue in place for the coming 4 weeks. At least initially today, the gold market didn't seem to see much pressure off news on a possible increase in 2011 Zimbabwe gold production, as the 10 to 12 extra tons of gold supply isn't that significant in the grand scheme of the world gold market. While the gold market will certainly take notice of the US PCE reading later this morning, the trade might see the Personal Income/Spending report or the Pending Home sales as more important, as those reports speak to the pace or lack of pace of the US economy. While the gold market initially seemed to be undermined by soft scheduled data yesterday, the gold market eventually seemed to catch a firm bid off the news of weak US data. Comex Gold Stocks were 11.146 million ounces up 600 ounces. OUTSIDE MARKET DEVELOPMENTS: (6:00 AM CST) Global equity markets were higher during the overnight and early morning hours, helped by carry-over strength from Thursday's rally in the US. The US Dollar broke down to a new 10-day low overnight, partially in response to a drop in 10-Year Note yields to 6 month lows. The weakness in the US Dollar compared to the Swiss Franc pushed that cross down to a record low. A report on Japanese inflation overnight showed its first monthly gain since December 2008, but continued weakness in retail sales in Japan suggests that it may take more time for the country to recover from the March earthquakes. The G8 meeting in France turned early morning discussions to the Euro zone debt situation and its potential impact on the global economy. Meanwhile, Consumer confidence in the UK for May came in better than expected. The latest round of inflation and sentiment readings out of the Euro zone ticked lower on the month in May. The market is on the lookout for May inflation data out of Germany this morning. This morning's economic calendar in the US will get a read on Personal Income and Spending at 7:30 AM CT, which is expected to come in slightly below March levels. The second tier of economic data will provide a look at May US consumer sentiment and April Pending Home Sales.

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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