Morning Gold Market Report

Compiled 06/14/11 6:00 AM ( CT ) Statistics: London Gold Fix $1,519.00 -$5.70 LME Copper Stocks 473,675 tons -2,075 tons GOLD MARKET FUNDAMENTALS: (6:00 AM CST) To start the second trading day of the week, the gold trade seems to have a generally positive environment. In addition to slightly supportive currency market action this morning, the gold bulls are cheered by bullish predictions from Gold Fields Mineral Services, who predicted moderate gains in gold prices later this year. Apparently GFMS based their bullish outlook on residual strong demand from China, which reportedly imported 200 tons of gold in the 1st quarter compared to 260 tons of gold in all of 2010! The GFMS analyst also pointed to ongoing demand from central banks and even suggested that Indian buyers would pick up their demand pace after the conclusion of the monsoon season. The bull camp might also be indirectly cheered by the favorable equity market action, as the prospect of growth is typically more supportive of gold than fears of deflation/recession. Holding back gold prices in the early action this morning, was yet another Chinese bank reserve requirement hike. However, traders should expect a measure of volatility today in the wake of US data which is generally expected to show a moderation of US inflation and also some measure of slowing. Comex Gold Stocks were 11.315 million ounces up 4,903 ounces. Comex Gold stocks are at their highest levels in the past 10 sessions. OUTSIDE MARKET DEVELOPMENTS: (6:00 AM CST) While equity markets in Asia and Europe were generally higher during the overnight session, early indications are that US equity markets would open with sizable gains this morning. The US Dollar is weaker against most of the major currencies this morning, although posting a minor gain versus the Yen. The Bank of Japan kept benchmark Japanese rates unchanged at their monetary policy meeting today. The People's Bank of China raised bank reserve requirements for the sixth time this year. Chinese CPI during May was up 5.5% year-on-year, higher than market expectations. Chinese Industrial Production during May was up 13.3% year-on-year, roughly in line with market forecasts. UK CPI during May was up 4.5% year-on-year, in line with expectations. Major US economic numbers to be released this morning include the May Producer Price Index and May Retail Sales at 7:30 AM, April Business Inventories at 9:00 AM, and private survey of store sales released during the session. In addition, Fed Chairman Bernanke will give a speech during the session.

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.