Wed 25 Jul 2012 07:24:00 CT
Compiled 07/25/12 6:00 AM (CT)
Statistics: London Gold Fix $1,587.50 +$4.25 LME Copper Stocks 251,450 tons -25 tons
GOLD MARKET FUNDAMENTALS: (6:00 AM CST) Gold found some support overnight to lift it off the bottom of the recent trading range, but it is still in a consolidation zone. Disappointing economic data from the US yesterday on top of poor data from Europe and China has many traders believing that monetary stimulus is coming, not only in Europe and China, but also in the US. This is supportive to precious metals as it raises the chances of inflation. A seasonal bullish demand factor may come into play as the festival season in India heats up.
The dollar is lower today after putting in fresh highs yesterday, and the Euro is up off of its lows from yesterday, which is lending support to gold and other commodities. The IMF warned that China's economy faces significant downside risk. From Spain, there are reports that the region of Valencia may also need federal money, so it is starting to look like the 2/3 of the country or more are in need of funds immediately. This has sparked speculation that the 100 billion Euro rescue fund that has already been set aside is not enough. The German Ifo reading overnight was down for the 3rd straight month, another of a series of bad economic data this week.
The release of New Home Sales data for the US later this morning may provide further reflection on the state of the US economy. There has been some coverage in the media this week about the US housing market having bottomed, so a disappointing number this morning may provide some support to gold, as it could increase the argument for the Fed to step in with monetary stimulus before the election.
Comex Gold Stocks were 10.811 million ounces up 32.
OUTSIDE MARKET DEVELOPMENTS: (6:00 AM CST) The Dollar is finding moderate pressure this morning but has held within its weekly trading range. Asian stock indices were mostly lower, with the Nikkei down 1.44% and the Shanghai A index down 0.47%. European equity markets are mostly higher this morning, highlighted by strong gains in Spain and Italy. A European Bank council member said that the Euro zone's rescue fund could receive a banking license to improve its effectiveness.
Japan posted a trade surplus of 61.7 billion Yen, which was much higher than expected, but that was due to declines in both imports and exports. UK GDP during the second quarter was down 0.7%, much worse than expected. A private survey of German business sentiment was at 103.3, lower than market expectations.
The only major US economic numbers this morning will be June New Home Sales at 9:00 AM.
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