Morning Gold Market Report

Compiled 08/09/11 6:00 AM ( CT ) Statistics: London Gold Fix $1,770.00 +$60.25 LME Copper Stocks 464,700 tons -600 tons GOLD MARKET FUNDAMENTALS: (6:00 AM CST) For the most part, US politicians still want to discount the downgrade action as a statistical error and they also want to question market reactions since the downgrade and that could be one reason why gold and other flight to quality instruments have continued to soar. The idea that the downgrade wasn't deserved and that $2 trillion more in cuts isn't that critical, could be a key catalyst for even more equity market losses an gold price gains ahead. With riots in London (reportedly because of a weak economy and government austerity) continuing overnight that would seem to create some additional uncertainty toward the second tranche of US spending cuts ahead. Gold might see a mixed reaction to the Chinese economic news overnight as China continues to see very hot inflation readings. The rate of gain in gold prices over the last three trading sessions has prompted some talk of an overbought technical status, but there doesn't appear to be any reason to moderate the highly uncertain condition in the marketplace. The scheduled US data flow today is extremely thin again and the trade is likely to take most of its early direction from the action in the US equity markets, with the markets shifting their focus toward the FOMC statement early this afternoon. Apparently the press is picking up signs of ongoing strong physical demand for gold and that isn't surprising in the wake of very few alternative investment angles. Comex Gold Stocks were 11.440 million ounces up 1,864 ounces. Gold stocks have declined 12 of the last 20 days. Comex Gold stocks are at their highest levels in the past 10. 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 moderate gains later on today. The US Dollar is weaker against most of the major currencies this morning, although posting gains versus the Canadian and Australian Dollars. Greek authorities have banned short selling on the Athens stock exchanged for the next two months. Chinese CPI during July was up 6.5% year-on-year, higher than expectations. The German Trade surplus during June was 11.5 billion Euros, lower than forecasts. UK Industrial Production during June was unchanged, lower than market projections. The Federal Reserve's Open Market Committee will announce their decision on US monetary policy at 1:15 PM. Major US economic numbers to be released this morning include second quarter Non-Farm Productivity at 7:30 AM, and private surveys of store sales released 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.

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