-- Posted Wednesday, 13 July 2005 | Digg This Article

Market Analysis from CapitalUpdates.com:

The Trade Deficit for May came in less than the expected $57 billion at $55.3 billion as exports climbed to a new record while imports fell.  “The May deficit compares with a record $60.1 billion in February and exceeds the average $51.5 billion for 2004, when the annual trade gap of $617.6 billion was the largest ever. The deficit reached $284 billion in the year’s first five months, compared with $236 billion in the year-earlier period.”

Import Prices for June rose 1%, but when excluding oil, Import Prices fell 0.4%.  Export prices were unchanged, but when excluding agriculture, Export Prices fell 0.1%.

The Treasury Budget for June came in less than the expected $28 billion at $22.43 billion, but the budget still came in as a surplus on tax receipts.  “The cumulative deficit for fiscal year 2005 was $249.80 billion, down from a cumulative $327.16 billion in the first nine months of fiscal 2004, which ended September 30.”

The White House is calling for a Budget Deficit of just $333 billion for 2005 now, $94 billion less than previously projected.  Job and income growth that resulted in higher tax receipts was cited as the reason.  Supplemental costs for war or programs like Medicare and Medicaid, plans for tax reform, social security reform, etc., are still not included.  There is some room in the budget for these costs next year, but the final costs will almost undoubtedly be more than the budget allows or accounts for.  Last year, President Bush pledged to cut the budget in half by 2009.

Tomorrow at 8:30AM EST brings CPI for June expected at 0.3%, Core CPI expected at 0.2%, Initial Jobless Claims for 7/09 expected at 322,000, Retail Sales for June expected at 0.9%, and Retail Sales excluding auto sales expected at 0.5%.

Oil inventories were expected to drop across the board, and though crude inventories drew down 3.9 million barrels and gasoline inventories fell 2.7 million barrels, distillates built by 3.2 million barrels.  Demand grew, but at a slower rate than the past.  Future Chinese demand has also been reported to be less than previously thought.  The build in distillates and slower demand figures brought oil prices a bit lower, but worries over tropical storm Emily making its way into the Gulf of Mexico held the price up from any significant losses.  For the most part, oil traded between $60 and $61 and ended the day near the bottom of its range, losing $0.61 to $60.01.

Treasuries dropped on this morning’s economic data and remained slightly lower throughout trade.  Weak demand at a 5-year note auction later in the day helped to keep prices lower.

The Dow spent the day mostly higher, the Nasdaq spent the day mostly lower, and S&P spent the day mixed, but all three indices ended on the plus side.  The Nasdaq made a new 6 month high and the S&P continues to sit just points away from 4 year highs.

Among the big names making news in the market today were Sprint and Nextel, Federated and May, CNOOC and Unocal, Gannett, Abbott, and Harley-Davidson.

The U.S. dollar index found nice gains on this morning’s trade deficit and remained higher throughout the day, sending the euro back below 121, and the yen back below 90.

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

Gold traded slightly higher in after hours New York Access trade late yesterday before turning mixed in Asia, falling off slightly in London, and then dropping in New York as the dollar found strength on US Trade Deficit data.  Gold traded between $423 and $424 for the rest of New York trade and ended with a loss of $2.30 to $423.60.  Silver again traded higher in early Asian trade before falling off to trade mixed and near unchanged throughout London and New York trade and end with a loss of $0.02 to $7.00.

Gold and silver equities fell a little over 1% this morning before rebounding slightly heading into the afternoon and ending the day with small losses.

More Precious Metals Analysis:

“While we didn’t think that the gold market was that pent up for a big rally off a soaring US Trade deficit, we aren’t surprised that a narrower than expected US Trade reading applied some pressure to prices. With the US numbers providing an offset to the recent sharp slide in the Dollar and the Fed reiterating their desire to continue hiking rates it is possible that the Dollar sees persistent strength ahead and that might serve to undermine the gold market. Recently the gold and silver markets have lacked a definitive theme and that might add to the liquidation potential into the end of the week.”- The Hightower Report, Futures Analysis and Forecasting

Gold & Silver Stock News Update from GoldReview.com:

Newmont’s Indonesia pollution trial set to open on August 5^th, South Africa’s mining unions in dispute with gold producers there, Placer Dome’s joint venture agreement with Magnum, on the Khul Morit property in Mongolia, NovaGold’s second quarter financial results and project updates, Agnico Eagle’s agreement with Cornerstone on the El Strato gold project, Newmont’s Indonesia investments to continue despite pollution charges, and Gold Field’s foreseen strong performance in the 4^th quarter were among the big stories in the gold and silver mining industry making headlines today.

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- Written by Chris Mullen

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-- Posted Wednesday, 13 July 2005 | Digg This Article

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