Compiled 07/24/08 6:00 AM (CT)

Statistics: London Gold Fix $927.75 -$7.00 LME Copper stocks 130,875 tons +1,425 tons

SILVER MARKET FUNDAMENTALS: (6:00 AM CT) While the silver market has apparently attempted to forge a quasi double bottom low off the prior session's low, the fundamental track in silver isn't exactly loaded with supportive themes. Certainly the market has been attempting to garner support from news that investment interest in silver derivatives remains strong, but in the end, the ebb and flow of flight to quality psychology looks to be the main force moving silver prices. Clearly the optimism toward the US economy, off the sharp slide in oil prices was the genesis behind the mid July to present slide in silver prices and without a rekindling of that concern, it is possible that stagflation fears could continue to weigh on prices. Surprisingly evidence of slowing in the UK and the Euro zone overnight did rekindle some buying interest in the precious metals markets and that would seem to leave the US existing home sales readings this morning as another critical fundamental pivot point for the silver trade. As in the gold market, the silver market looks to take its initial guidance from the US scheduled numbers and the subsequent chain reaction in the Dollar and US equity markets. One might also note that silver exchange stocks posted a rather moderate build overnight and that could be seen as a bearish development by some traders.

OUTSIDE MARKET DEVELOPMENTS: (6:00 AM CT) It would seem like a slight reversal in oil prices in the wake of a rather distinct pattern of recent weakness has provided the gold and silver bulls with a bit of a lift this morning. However, it is also possible that minor weakness in the US Dollar and initial weakness in global equity markets is providing the precious metals with some additional lift. In fact, despite the recent pattern of economic optimism toward the US economy that was largely fomented by the recent and rather robust slide in oil prices, the flow of international economic numbers overnight and the anticipated flow of weak US numbers this morning might have resurrected some economic flight to quality concern in the metals markets. However, it should be noted that oil prices initially managed a fresh new low for the move before recovering and therefore the trade might not know how to measure the impact of the action in the oil markets this morning. On the other hand, some players might be expecting further economic anxiety in the wake of upcoming US existing home sales figures. With the US initial and ongoing claims readings also due out this morning and the US equity market showing an initial profit taking bias, one might be able to suggest that economic vulnerability will be present early today. However, mixed into the current environment are concerns that the US Fed is possibly moving closer to a rate hike posture and that can sometimes be seen as a limiting development for gold and silver.

Technical Analysis:
Note: Compiled during previous session 07/23/2008 at 3:21 PM CBOT SILVER (SEP) 07/24/2008: The market back below the 60-day moving average suggests the longer-term trend could be turning down. Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The close below the 9-day moving average is a negative short-term indicator for trend. The swing indicator gave a moderately negative reading with the close below the 1st support number.