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OUTSIDE MARKET DEVELOPMENTS: While a number of international equity markets managed to bounce overnight, one doesn’t get the impression that global economic sentiment has actually improved. In fact, the Dollar seems to have remained in favor, in the wake of ongoing fears toward the Greece financial condition. However, the markets did see a rather robust UK house price gain overnight, but that news might have been offset by surprising comments from Trichet, who suggested that the risk of a global depression was underestimated. However, economic sentiment might improve temporarily this morning in the wake of the US 4th quarter GDP reading. In fact, Obama early in the week hinted at an improvement in the US GDP report, but the trade already seems to have baked in a strong US GDP report for this morning.
GOLD MARKET FUNDAMENTALS: While the gold market seems to remain focused on demand prospects, the track of supply side news this week seems to have generally favored the bear camp. Fortunately for the bull camp news of a rise in Chinese gold production this week, was offset by news of a jump in Indian gold imports. However, the gold trade has to be concerned about residual strength in the US Dollar, as the Dollar managed yet another new high for the move early this morning and in the process the Greenback reached the highest level since September 1st. While the trade is generally anticipating a strong US GDP reading this morning, one would have to think that the market has already factored in a large portion of that type of result. The bear camp will point out that April gold remains below the 100 day moving average of $1,088.70 into the opening today, while the bull camp might try to play up the strong leap in UK house prices and a slightly positive early track in the US equity markets. For the gold market to benefit from higher equity prices today might require equities to maintain higher prices all the way into the close today, as rallies in stocks this week have been fleeting events.
SILVER MARKET FUNDAMENTALS: While May silver has managed to recover from the low forged yesterday, the bull camp would seem to have very few themes at its disposal. Clearly silver saw some pressure this week off a growing disappointment in the pace of the US economy, and those views also seem to have been enhanced by a very confusing political environment and by noted declines in US equity prices. Like gold, the silver market also seemed to be partially undermined by the resurgence of concerns toward the Greece situation. Furthermore, silver also seems to have be weighed down by noted weakness this week, in a host of physical commodity markets. In conclusion, the silver bulls appear to need something very positive from the US GDP report this morning, but the question is whether or not macro economic optimism will be sustained after the GDP reading is absorbed. It is also possible that a strong US GDP reading could lift the Dollar further this morning and that could serve to limit the benefit of economic optimism in most physical commodity markets.
PLATINUM: With a partially oversold technical condition and hopes of some positive news from the US economic report front, we have to give the initial edge to the bull camp. Therefore close-in support is seen at $1,500 today and we can’t rule out a rise back to $1,526. However, with a slack economic outlook still generally in place, traders should not shift back into a full bull mood.
