Compiled 05/08/08 6:00 AM (CT)

Statistics: London Gold Fix $872.25 -$1.75 LME Copper stocks 110,125 tons +1,100 tons

GOLD MARKET FUNDAMENTALS: (6:00 AM CST) With the Dollar at least temporarily rising above another critical technical level on the charts overnight, it is possible that potentially supportive internal fundamental developments in gold will be largely discounted today. However, it should be noted that Russian Gold and currency reserves continued to grow in the latest weekly figures, but the market recently hasn't given that trend much credence. On the other hand, Harmony mines overnight noted a decline in quarterly production to 332,662 ounces from a prior output level of 398,764 ounces. In a negative supply side development this morning, Gold Fields apparently managed to restart operations at an idled mine. In another partially undermining development the market continues to see the residue from a prior IMF decision to sell gold, in a move to provide long term financing to that organization, but because the move was done in an effort to endow operations in the future, it is possible that some traders will see the IMF sale as the last such sale. It would also seem like Indian gold demand patterns have failed to inspire the market and that would seem to leave the market in a Dollar tracking position. Apparently news that a noted commodities bull was looking to buy gold on breaks this morning, has had little impact on gold prices in the early going today and that would seem to suggest that the bear camp at least initially has the upper hand.

OUTSIDE MARKET DEVELOPMENTS: (6:00 AM CST) Apparently the slide in the US stock market yesterday afternoon served to undermine gold and silver prices, with the gold market falling from a morning high of $873.5, down to a late low of $866.5. Apparently the metals markets were unable to garner support from news of a huge jump in US Consumer Credit and surprisingly the metals weren't able to garner any support from the latest record jump up in crude oil prices. In short, the gold and silver trade seems to be singularly focused on the action in the Dollar but it is also possible that the metals markets were also seeing some pressure from a slight resurgence of US financial sector concerns. While one would think that a resurgence of financial sector concerns would benefit gold and silver prices, the trade just hasn't been able to return on the flight to quality angle lately. With the US schedule today producing a series of initial claims readings and a wholesale trade report, there could be an initial price reaction to the Dollar early in the trade, but some traders may view EU and UK rate decisions this morning, as the primary developments of the trading session.

Technical Analysis:
Note: Compiled during previous session 05/07/2008 at 3:21 PM CT CBOT GOLD (JUN) 05/08/2008: Daily stochastics are showing positive momentum from oversold levels, which should reinforce a move higher if near term resistance is taken out. The market's short-term trend is negative as the close remains below the 9-day moving average. The market setup is somewhat negative with the close under the 1st swing support.

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