Mon 21 May 2012 07:36:00 CT
Compiled 05/21/12 6:00 AM (CT)
Statistics: London Gold Fix $1,590.25 $+2.25 LME Copper Stocks 224,375 tons +3,250 tons.
GOLD MARKET FUNDAMENTALS: (6:00 AM CST) While June gold managed a minor new high for the move overnight, the market wasn't able to hold that initial probe higher. Gold was probably lifted by hints of support for the Chinese economy from the Chinese leader overnight and it is also likely that gold saw some lift from the Fed's Lockhart who suggested that sustained monetary accommodation was still warranted. Lockhart also suggested that the dominating risk to the US economy was from spillover from Europe. With the World Gold Council last week seemingly fashioning quarterly supply and demand figures into a suspect bullish condition, the direction of the Chinese economy should become a key determinant for gold prices in the near term. In fact, evidence of slowing in the Indian economy and slumping Indian gold demand is thought to more than offset the anticipated rise in Chinese demand ahead especially if the Chinese economy shows any further slowing. All things considered, the bull camp has to be somewhat discouraged by the lack of upside action in gold prices this morning in the face of supportive dialogue from the Chinese leader and from a member of the US Fed. In fact, seeing gold prices waffle around both sides of unchanged this morning, in the face of supportive currency and US equity market action, would also seem to suggest that a portion of the gold trade just isn't overly interested in the bull case. Comex Gold Stocks were 11.001 million ounces down 32 ounces. The Commitments of Traders Futures and Options report as of May 15th for Gold showed Non-Commercial traders were net long 103,824 contracts, a decrease of 17,155 contracts. The Commercial traders were net short 130,952 contracts, a decrease of 20,244 contracts. The Non-reportable traders were net long 27,128 contracts, a decrease of 3,089 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 130,952 contracts. This represents a decrease of 20,244 contracts in the net long position held by these traders. While the non commercial and non reportable net long position in gold was pegged at 130,952 contracts in the last COT report, June gold did see an additional $31 an ounce slide to last week's lows, from where the COT readings were measured and therefore the net long readings might have seen even more liquidation before gold prices recovered late last week.
OUTSIDE MARKET DEVELOPMENTS: (6:00 AM CST) Hong Kong shares were weaker overnight but mainland Chinese shares managed to claw out minor gains off hints of easing from the Chinese government. European equity markets were a touch higher in the wake of comments from the G8 that suggested there would be an ongoing effort to keep Greece in the Euro zone. Surprisingly US equities were moderately higher in the early action today, perhaps because of the supportive Chinese dialogue and perhaps because of suggestions from the Fed's Lockhart that sustained monetary accommodation was still warranted and that the Option of QE3 couldn't be taken off the table. The US economic report slate today is somewhat thin with a Chicago Fed National Activity index release that is expected to rise by a minimal amount.
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