Compiled 05/19/08 6:00 AM (CT)

Statistics: London Gold Fix $908.75 +$23.75 LME Copper stocks 122,725 tons +1,500 tons

GOLD MARKET FUNDAMENTALS: (6:00 AM CST) With some traders overnight touting the fact that June gold managed to regain the $900 level with room to spare and the Dollar also forging another lower low for the move this morning, the bull camp seems to have sustained its leadership posture through the weekend. The European gold trade seems to be bidding up gold prices off the idea that resurgent inflation pressures will rekindle inflation related buying again and that would also seem to begin to countervailing the overt focus on the bull's need for a persistently weaker US Dollar. However, in order to translate into a classic inflation driven market, the gold trade might need to see persistent evidence of recovering US growth and that in turn could make the US Leading Indicator report this morning more important. In fact, with a major Bank out overnight with what would appear to be a partially bearish forecast for silver, and a major platinum report sowing ongoing tightness concerns in the PGM markets, it is clear that the precious metals markets are faced with mixed opinions. While news of rising Kazakhstan gold and foreign currency reserves doesn't hold the same importance as gains in Russian Gold and currency reserves, it is possible that the gold market will derive some support from the idea that many countries look to be into a pattern of building reserves of gold. In the end, the bull camp seems to be making a transition from a flight to quality posture, to a more classic inflation focus.

OUTSIDE MARKET DEVELOPMENTS: (6:00 AM CST) While the precious metals markets don't have a perfect storm from outside market action in the early going today, it would seem like a weaker US Dollar is enough support to leave last week's upward bias in place at the start of the new trading week. In fact, sloppy international equity prices and initial weakness in energy prices could be seen as a negative early today, but apparently the metals markets see both those markets to be in up trends and therefore the trade might be discounting the negative outside market action. The US Leading Indicator report is due out this morning and is expected to be either minimally weaker or slightly higher and that could leave the currency markets without a clear cut reaction to the data. However, seeing the Dollar remain weak in the face of a higher US Leading Indicator reading could give added credence to the downside breakout in the Dollar on the charts this morning. With US Treasuries in Asia supposedly higher off lingering US slowing concerns, one gets the sense that the bias is set to remain against the Dollar. From the oil markets perspective, it would seem like concern of soaring Chinese diesel imports and talk of an energy export slowdown from China, has left the trade generally upbeat toward the energy sector.

Technical Analysis:
Note: Compiled during previous session 05/16/2008 at 3:21 PM CT CBOT GOLD (JUN) 05/19/2008: A positive indicator was given with the upside crossover of the 9 and 18 bar moving average. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The cross over and close above the 18-day moving average indicates the intermediate-term trend has turned up. Market positioning is positive with the close over the 1st swing resistance.

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