Compiled 05/13/08 6:00 AM (CT)

Statistics: London Gold Fix $877.00 -$5.50 LME Copper stocks 121,775 tons +125 tons

GOLD MARKET FUNDAMENTALS: (6:00 AM CST) With gold prices starting out weaker today in the face of fresh news of a decline in South African mining activity in the month of March, it is clear that classic fundamentals continue to take a back seat to outside market influences. In other words, seeing South African gold output declining by over 10% in March is simply countervailed by a minor decline in oil prices and rising US Dollar. Surprisingly the lower oil price influence is embraced as the key inflation force this morning in the gold market, despite the fact that the markets saw evidence of sharply rising inflation from Spain, the UK and the US Fed overnight. In fact, some Press outlets were pointing to the weakness in the London gold market this morning and suggesting that those declines were the result of favorable equity market action. In short, the outside market impact on gold has emboldened the bears in the early going today, and it could take a softer than expected retail sales report just to alter the early tilt in prices.

OUTSIDE MARKET DEVELOPMENTS: (6:00 AM CST) With the US economic report slate today becoming more active and the US Fed overnight hinting at ongoing inflation concerns in the US, it is not surprising to see the US Dollar making initial gains. In fact, with the trade generally expecting a slight rise in US retail sales figures this morning and the currency markets in general failing to embrace a true leadership currency in recent trading sessions, it is possible that the US data this morning could result in a rather reactionary move in the Greenback today. On the other hand, the markets also saw inflationary news from the UK, Spain and the US Fed overnight and yet that news didn't seem to lend much in the way of support to gold and silver prices. On the other hand, weakness in oil prices off International Energy Agency calls for more OPEC oil production did seem to add to the negative tilt in the precious metals markets in the early going today.

Technical Analysis:
Note: Compiled during previous session 05/12/2008 at 3:21 PM CT CBOT GOLD (JUN) 05/13/2008: Momentum studies are rising from mid-range, which could accelerate a move higher if resistance levels are penetrated. The market's short-term trend is positive on the close above the 9-day moving average. The market's close below the pivot swing number is a mildly negative setup.

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