Morning Gold Market Report

Compiled 08/08/11 6:00 AM ( CT ) Statistics: London Gold Fix $1,709.75 +$44.75 LME Copper Stocks 465,300 tons +175 tons GOLD MARKET FUNDAMENTALS: (6:00 AM CST) To the overnight highs, the October gold futures contract was up as much as $108 an ounce from last week's lows! The somewhat surprise US credit rating cut, clearly ignited a wave of flight to quality buying of gold. The gold trade might have been undermined in the wake of action from the ECB to support various debt instruments in the Euro zone, but instead the trade took almost all of its direction from the US developments. With a number of senior US Congressman blaming the drawn out debt negotiations and the Tea Party for the downgrade, it is clear that many US leaders have yet to embrace the idea that credit rating agencies wanted even more austerity than was finally offered by the US. With credit rating agencies already hinting at more cuts to the US credit rating ahead, without more definitive spending/deficit reductions and Washington unwilling to acknowledge its short comings, the bull camp in gold has to remain confident. At least to start the week, it would appear that much better than expected US payroll readings from last week have been mostly discounted and that macro economic fears generally remain in place. The Commitments of Traders Futures and Options report as of August 2nd for Gold showed Non-Commercial traders were net long 289,250 contracts, an increase of 19,761 contracts. The Commercial traders were net short 330,796 contracts, an increase of 12,863 contracts. The Non-reportable traders were net long 41,545 contracts, a decrease of 6,899 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 330,795 contracts. This represents an increase of 12,862 contracts in the net long position held by these traders. It should be noted that the Commercial Net short position in gold hit a fresh record in this COT report, but it should almost be noted that the Non commercial and non reportable combined net long position also hit a fresh record long level. Comex Gold Stocks were 11.439 million ounces up 129 ounces. OUTSIDE MARKET DEVELOPMENTS: (6:00 AM CST) While equity markets in Asia and Europe were generally weaker during the overnight session, early indications are that US equity markets will open with substantial losses later on today. The US Dollar is weaker against most of the major currencies this morning. G7 finance ministers announced that they will take unified steps to support financial stability and growth in the Euro zone. The European Central Bank announced that it would support Spain and Italy by purchasing their sovereign debt with their bond-buying program. There are no major US economic numbers to be released this morning.

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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