Compiled 05/09/08 6:00 AM (CT)

Statistics: London Gold Fix $887.25 +$15.00 LME Copper stocks 121,275 tons +11,150 tons

GOLD MARKET FUNDAMENTALS: (6:00 AM CST) While a number of South African gold producers have clearly voiced concern that production is set to remain crimped because of lingering power problems, the fundamental case for higher gold prices is somewhat dampened by suggestions that an important Indian gold demand period this week saw only modest interest. However, there does seem to be a growing amount of classic inflationary dialogue flowing from central bankers and market pundits and that in turn could be indirectly providing fresh support to gold prices. Certainly seeing crude oil prices venture toward the $125 per barrel level and seeing crude oil this week gaining almost $10 per barrel from last week's close, foments inflation talk again and that in of itself also rekindles uncertainty. However, even though gold is capable of forging a weekly gain today, the liquidation of the last three months does seem to be keeping some would-be buyers at bay. Therefore, the bull camp would seem to need ongoing weakness in the Dollar and more gains in crude oil today to continue to control prices. However, the bear camp would like to see a significant narrowing of the US trade deficit reading this morning and a higher US Dollar because of report or they would like to see a resurgence of significant US slowing fears.

OUTSIDE MARKET DEVELOPMENTS: (6:00 AM CST) With the oil market persistently making new all times highs on its charts and the US Dollar tracking modestly lower from its recent highs, it would seem like the outside market influences on the precious metals markets are positive at the start of the US trade today. With a US Trade Balance release due out early in the session today, there is the chance of some increased volatility in the Dollar and at least an initial reaction in gold and silver prices, but the trade doesn't seem to think that the Trade balance readings will offer a sustained influence on metals prices. However, it is clear that inflationary expectations are being heavily touted in the headlines and that isn't surprising considering that crude oil prices this week have managed a fresh new all time high in every trading session. On the other hand, traders do need to watch for a surprise in the US Trade Balance report this morning, as the Dollar at the end of last month reached all the way down to the 71.00 level and that spike culminated a rather severe and sharp three month slide in the Dollar which in turn could have given US exports a big boost. In short, the bulls have the initial edge because of the seemingly entrenching downside action in the Dollar and more specifically because of the clearly entrenched upside tilt in oil prices.

Technical Analysis:
Note: Compiled during previous session 05/08/2008 at 3:21 PM CT CBOT GOLD (JUN) 05/09/2008: Daily stochastics are showing positive momentum from oversold levels, which should reinforce a move higher if near term resistance is taken out. A positive signal for trend short-term was given on a close over the 9-bar moving average. With the close over the 1st swing resistance number, the market is in a moderately positive position. Short-term indicators suggest buying pullbacks today.

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