Compiled 07/25/08 6:00 AM (CT)

Statistics: London Gold Fix $932.25 +$5.00 LME Copper stocks 133,475 tons +2,600 tons

GOLD MARKET FUNDAMENTALS: (6:00 AM CST) With Indian gold prices managing a slight rise overnight and the early US action positive, one might conclude that flight to quality psychology is coming back into play. As suggested already, outside market conditions this morning are also favoring the bull camp, but in order for flight to quality mentality to fully dominate the action in gold again, probably requires a really negative result from the US scheduled report slate. While the gold market hasn't paid that much attention to classic supply side news lately, some traders might see the news of a minor decline in weekly Shanghai gold stocks as a supportive development. On the other hand, the gold market is at least partially undermined by discussions of gold sales from the Swiss National Bank in the 1st half of the year, even though the prorated sales in the first half, were well below the annual allowable sales pace under the gold sales agreement. It should be noted that gold did see a bullish gold price forecast overnight from a noted Canadian brokerage firm and in the event that US macro economic concerns run hot today, it is possible that gold will end the week with a slight heightening of flight to quality psychology. In short, the gold market might be in the process of exhibiting a fresh inverse relationship with the US equity market again.

OUTSIDE MARKET DEVELOPMENTS: (6:00 AM CST) Clearly the overnight trade in gold was benefiting from mostly favorable outside market action. Certainly one can't suggest that weakness in the Dollar, strength in oil and uncertainty toward the US economy has resulted in a full return to a flight to quality mode, but one could suggest that macro economic anxiety seems to be on the rise again. In addition to the disappointing US existing home sales figures, the much biggest than expected loss at Ford and the a slight bounce in oil prices overnight, the metals markets might also be benefiting from the latest sharp jump up in US home foreclosures. In fact, with the weakness in US existing home sales figures and the foreclosure news overnight, that should make the focus on the US new home sales figures this morning very intense. With the US Durable goods readings also due out today there will be no shortage of fundamental information on the US economy in the trading session today. With the UK also posting some weak numbers in a 2nd quarter GDP reading overnight, one gets the sense that most markets are anticipating more evidence of slowing.

Technical Analysis:
Note: Compiled during previous session 07/24/2008 at 3:20 PM CT CBOT GOLD (AUG) 07/25/2008: Declining momentum studies in the neutral zone will tend to reinforce lower price action. The market's short-term trend is negative as the close remains below the 9-day moving average. The daily closing price reversal up on the daily chart is somewhat positive. It is a slightly negative indicator that the close was under the swing pivot.

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