Market Analysis from CapitalUpdates.com:

I’d like to start out today by encouraging our readers to email me with questions, comments, or suggestions about this report at cm@goldseek.com. 

Note: All US markets are closed Monday in observance of Independence Day.

Michigan Sentiment for June came in higher than the expected 94.6 at 96.  Sentiment rose for the first time this year to a 6 month high.

Construction Spending for May came in much less than the expected 0.5% at -0.9%.  April’s mark of 0.5% was also revised sharply downward to -1.1%.  March’s mark was revised down from 0.6% to -0.2%.  This marks the first time in three years that construction has declined for 3 straight months.

The ISM Index for June came in better than the expected 51.5 at 53.8.  The Index rebounded from its lowest level in nearly 2 years and accelerated for the first time in 7 months.  A reading above 50 indicates expansion in the manufacturing sector.  This report was closely watched as the index had been trending lower recently and was getting close to dropping below 50.  The fed has never raised rates with an ISM reading below 50.

After hitting all-time highs near $61 on Monday, oil fell throughout the middle of the week to close at $56.50 Thursday before rebounding on Friday.  Oil gained $2.25 to $58.75 on Friday, but is still down on the week by $2.09 or 3.49%.  “Crude oil futures are more than 51 percent above year-ago levels, but would still have to top $90 a barrel to reach the inflation-adjusted high set in 1980.”

Treasuries fell throughout their shortened trade Friday “on speculation yields below 4 percent don't reflect expectations the Federal Reserve will continue to increase interest rates this year.”  For the week, the yield is higher by 3.45% and the bond is lower by 1.1%.

The Dow, Nasdaq, and S&P started off the 3^rd quarter with small gains on mostly positive economic data Friday.  In the fist half of the year, the Dow was down 4.71%, the Nasdaq was down 5.45%, and the S&P was down 1.7%.

For the week, the Dow is up 0.23%, the Nasdaq is up 0.2%, and the S&P is up 0.24%.

Among the big names making news in the market Friday were GM, Ford, Toyota, UAL, CNOOC and Unocal, Microsoft and IBM, 3M, MetLife and Citigroup, VW and KPMG, Citigroup, Pfizer, Morgan Stanley, Capital One, and Taser.

The U.S. dollar index rose Friday on strong ISM and Michigan Sentiment data and made new 13 month highs.  The euro index fell under 120 and made new 13 month lows, the slide partly helped by German Chancellor Gerhard Schroeder losing a parliamentary vote of confidence.  The Treasury said Friday that they expect the Chinese to revalue the Yuan within “the next few months.”  This follows Thursday’s news that “Two senators sponsoring legislation aimed at forcing China to revalue its currency said Thursday they would hold off pressing for a vote at the urging of Federal Reserve Chairman Alan Greenspan and Treasury Secretary John Snow.  Sens. Charles Schumer, D-N.Y., and Lindsey Graham, R-S.C., announced the delay after meeting with Greenspan and Snow at the Capitol. The lawmakers said they had received indications from the officials that the Chinese were on the verge of moving voluntarily to a new currency system.”  The yen fell below 90 and made new 11 month lows.

For the week, the dollar is higher by 1.69%, the euro is lower by 1.08%, and the yen is lower by 2.29%.

This week’s economic reports:

Next week brings another busy week.  Internationally, both the Bank of England and the European Central Bank are due to meet to decide on interest rates.  The dollar has strengthened recently on beliefs that one or both of the banks may actually cut rates.  Should they do so; the dollar will likely strengthen further.  Should they hold rates; the dollar will likely weaken.  Next week also brings the G8 summit in Scotland.  World trade, oil, Chinese Yuan reform, debt relief, and climate change are among some of the main issues to be discussed.

Economically, next week starts off on Tuesday at 10AM with Factory Orders for May expected at 2.8%.  On Wednesday are ISM Services, on Thursday are Initial Jobless Claims, and on Friday are jobs data, Wholesale Inventories, and Consumer Credit.

Gold & Silver Report from GoldSeek.com & SilverSeek.com: 

COT Gold Report - July 1, 2005

COT Silver Report - July 1, 2005

Gold fell steadily lower overnight, dropping as much as $2 in Asia before rebounding nicely in London and reaching new highs above $436 before dropping off sharply at the New York open.  Gold fell throughout the morning and dropped to as low as $426.10 in New York trade before rebounding slightly and ending with a loss of $8.30 or 1.91% to $427.10.

Silver traded mostly higher in Asia before falling slightly in London trade.  Silver rebounded to find small gains in late London trade before also dropping off sharply at the New York open and falling throughout morning trade.  Silver fell to as low as $6.78 in New York trade before rebounding a bit and ending with a loss of $0.16 or 2.28% to $6.85.

Gold found its first losing week in 6 and is lower by $12.90 or 2.93% on the week.  Silver is lower by $0.40 or 5.52% on the week.  Gold sits at 2 week lows and silver sits at near 2 month lows.

Gold and silver equities dropped almost 3% in morning trade before rebounding throughout the afternoon and ending with small gains Friday.

For the week, the XAU, HUI, and GDM were actually able to find small gains despite the sharp drops in gold and silver.  This makes their 6^th week of gains in the past 7 after seeing just slight losses last week.  For the week, the XAU is 0.84%, the HUI is up 1.44%, and the GDM is up 1.15%

More Precious Metals Analysis:

“Gold hit a number of stumbling blocks in the action Friday but the most significant one was the explosion in the US Dollar. Even more damaging to gold is the fact that the Dollar action might be extended as the fundamental and technical case for a strong Dollar has improved. It was also clear that gold was coming under spillover selling from the rest of the metals markets as the market is now beginning to fret over ideas that Chinese demand for a number of base metals is thought to be waning. With lead prices hitting the lowest level in 8 months and iron ore shortages in China easing it is not a leap of faith to think that demand for all metals is set to soften from Asian. Lastly given the existing overbought spec position in gold and silver the failure at chart support levels wasn't all that surprising.” - The Hightower Report, Futures Analysis and Forecasting

Gold & Silver Stock News Update from GoldReview.com:

WINNERS

LOSERS

Note:  Winners & Losers Will No Longer Track Stocks Under $1.

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- Written by Chris Mullen

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