Compiled 07/03/08 6:00 AM (CT)

Statistics: London Gold Fix $939.75 +$4.50 LME Copper stocks 122,500 tons +25 tons

GOLD MARKET FUNDAMENTALS: (6:00 AM CST) Gold seems poised to move back above 950 and break out to the upside. All it may take is another poor economic employment reading in the US to drive gold higher and the dollar lower. A slow US economy and food/energy inflation are having a significant impact on emerging economies, and traders are concerned that as all of the forces line up today, the result could be another surge in interest in gold as investors scramble for a safe haven during a period of economic instability. The downside of a slowing world economy would be declining jewelry demand and somewhat reduced inflationary fears, but global investment demand appears to be the overriding factor, and buyers are likely to become much more active if the payroll number is weak. Peru gold production in May increased to 14.68 million grams, up 13.6%. Gold holdings for the SPDR Gold Trust, the world's largest ETF, jumped 2.2% yesterday to 658.57 million tonnes.

OUTSIDE MARKET DEVELOPMENTS: (6:00 AM CST) The trade expects a 1/4% interest rate hike in Europe, and there is a general perception that the higher rate will drive the dollar lower and commodity prices higher. This, however, is already priced into the market, and the key focus is the US economy and the potential for the food/energy inflation trend to spark a global slowdown in growth and maybe more. Labor unrest is also a key issue. The Peru strikes continue to build momentum as more and more mines are joining the fight. This has resulted in a collapse in coal prices, a collapse in mining stocks and a collapse in big manufacturing stocks. Commodity prices were sharply higher for the most part yesterday, but commodity stocks were down. If the employment data shows a poor reading for the US economy, traders fear more inflation, a sharp drop in the dollar and a weakening world economy.

Technical Analysis:
Note: Compiled during previous session 07/02/2008 at 3:21 PM CT CBOT GOLD (AUG) 07/03/2008: Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The close above the 9-day moving average is a positive short-term indicator for trend. The market has a slightly positive tilt with the close over the swing pivot.

Additional Reference: