-- Posted Tuesday, 2 August 2005 | Digg This Article

Market Analysis from CapitalUpdates.com:

Personal Income for June came in a bit higher than the expected 0.4% at 0.5%.  Personal Spending came in as expected at 0.8%.  The Personal Consumption Expenditures (PCE) price index was steady, both the overall and Core number, after being forecast up 0.1%.  “Over the past year, this core price index -- eyed closely by policy-makers at the Federal Reserve -- is up 1.9 percent, at the high end of the central bank's perceived comfort zone. However, a narrower measure that looks only at prices that can be observed in markets, showed a more moderate rise of 1.6 percent.”  Although the current monthly number was flat, prior numbers were revised upward, making for a mixed inflation reading.

Factory Orders for June came in as expected at 1.0%, rising for the 4^th straight month and showing acceleration in the economy in the near future.  Excluding transportation, orders rose 1.3%. 

Tomorrow at 10AM EST brings ISM Services for July expected at 61.0.

Oil was slightly weaker this morning after setting a new record intraday high at $62.30 yesterday.  After starting off lower, oil prices spiked a bit following the release of a report by the government predicting numerous tropical storms and hurricanes to hit the US in the coming months, but oil still remained mostly lower until trade late in the day when it climbed to $61.89, gaining $0.32 on the session, a new record closing high.  In tomorrow’s inventory report, analysts are expecting slight draw-downs in oil and gasoline, and a build in distillates for the 11^th week in a row.

Treasuries fell modestly on tame inflation data, and the 10-year note yield made a new 3 and ½ month high.  The reintroduction of 30-year bond sales is expected to be announced early tomorrow, after having previously ended in October 2001.

The Dow, Nasdaq, and S&P found steady gains throughout the day, once again despite higher interest rates and record high oil.  The Nasdaq and S&P closed at new 4 year highs.  The Russell 2000 closed at new all-time highs.

CNOOC dropped its bid for Unocal, mostly due to “political pressure,” therefore opening the door for Chevron.  GM, Ford, and Chrysler were among those reporting auto sales for July that totaled to the second biggest ever.  Among the other big names making news in the market today were Qwest, Molson Coors, Whirlpool, Mercedes, Tyco, GM, Marsh & McLennan, Comcast, Qwest, Sirius, and Kinder Morgan and Terasen.

The U.S. dollar index traded lower on tame inflation data, but losses were minimal.

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

Gold and silver traded mixed and near unchanged in choppy trade throughout Asia, London, and New York trade, with gold ending unchanged at $431.40, still a one month high, and silver losing $0.04 to $7.22.

Consolidation was the name of the game in all precious metals as mixed economic reports kept the dollar near unchanged and the threat of a South African mining strike was delayed until at least Sunday, though permission was received from government mediators to legally start the nation-wide strike if talks do not change between now and then.  South Africa is the world’s biggest gold producing nation, and a strike would lead to production losses of more than 28,000 ounces per day.

The CRB gained 2.85 points to 317.57, closing at its highest since the 24 year high close of 322.42 made last March 16^th.  Copper for August delivery traded as high as $1.706 per pound, setting yet another record high.

Gold and silver equities actually found some gains despite the muted moves in the metals, bucking the trend of the last few sessions.  All three indices steadily gained throughout the day and ended near their highs.

More Precious Metals Analysis:

“The gold market was lucky it could manage to show lackluster action as the rest of the metals were even under more salient pressure. Some gold traders were disappointed in the Dollar's failure to hold at markedly lower early levels and with Euro zone political conflict showing up again on Tuesday we are not surprised to see the Dollar bounce and gold see some spillover pressure from silver and platinum. However, the platinum market managed a significant new high for the month early Tuesday and it could have reached a short term overbought status along with the silver market into mid session.” - The Hightower Report, Futures Analysis and Forecasting

Gold & Silver Stock News Update from GoldReview.com:

South African gold miners to launch a strike on Sunday, Goldcorp’s entering into a US$500 million credit facility to finance acquisitions, Randgold’s update on the Loulo gold mine in Mali, AngloGold’s new order mining rights, Newmont’s confidence about their trial in Indonesia, and Silvercorp’s three new bonanza grade veins at the Ying silver project 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 Tuesday, 2 August 2005 | Digg This Article

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