Compiled 07/18/08 6:00 AM (CT)

Statistics: London Gold Fix $961.50 -$3.00 LME Copper stocks 128,550 tons +650 tons

GOLD MARKET FUNDAMENTALS: (6:00 AM CST) In the short term, the gold market doesn't look to be greatly impacted by classic supply and demand fundamentals, as the ebb and flow of financial influences looks to dominate psychology. At least initially, the gold market doesn't seem to be garnering much in the way of flight to quality buying support as the trade apparently sees the Citi group earnings to be an effective offset to the Merrill Lynch figures. In fact, with oil prices up by $2 per barrel and gold prices showing early losses in excess of $11 an ounce, it would not seem like gold is that interested in the energy market action. In fact, with the Dollar remaining initially lower today, it would also not seem like the gold trade is even that interested in the potentially supportive currency market action. In short, it would appear that the flight to quality focus is being discounted somewhat in the face of the recent strength in US equity markets. Therefore, the final track off the Citi earnings news and the track of sentiment off other US earnings reports later today looks to be the main force driving gold prices.

OUTSIDE MARKET DEVELOPMENTS: (6:00 AM CST) Prior to the Citi group earnings news this morning, the gold and silver markets were already seeing a rekindling of US Financial sector concerns in the wake of poor earnings news from Merrill Lynch. The gold and silver bulls were also initially emboldened by a $2 per barrel rise in crude oil prices off renewed turmoil and production losses in Nigeria. In fact, the gold and silver bulls also seemed to be poised to derive some support from renewed weakness in the US Dollar in the wake of disappointing tech sector earnings news, but once again the Citi results have apparently saved the Dollar. While some players might suggest that JP Morgan, Wells Fargo and Citi earnings news this week hints that the financial crisis is coming under some control again, the trade also recognizes that the write down levels in the financial sector remain really high and that could eventually leave the flight to quality mentality in place.

Technical Analysis:
Note: Compiled during previous session 07/17/2008 at 3:20 PM CT CBOT GOLD (AUG) 07/18/2008: Momentum studies trending lower from overbought levels is a bearish indicator and would tend to reinforce lower price action. A positive signal for trend short-term was given on a close over the 9-bar moving average. It is a slightly negative indicator that the close was under the swing pivot.

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