-- Posted Wednesday, 10 August 2005 | Digg This Article

Market Analysis from CapitalUpdates.com:

The Treasury Budget Deficit for July came in less than the expected $56.7 billion and less than last July’s $69.2 billion at $52.8 billion.  “Through the first 10 months of the government's fiscal year, the federal deficit has totaled $302.6 billion, $110.3 billion less than at this time in 2004... For all of 2005, the CBO currently expects a deficit of less than $350 billion, with the agency scheduled to make public an updated forecast next Monday. The White House forecast a deficit of $333 billion.”

Tomorrow at 8:30AM EST brings Initial Jobless Claims for 8/06 expected at 315,000.  Also at 8:30 are Retail Sales for July expected at 2.0%.  Excluding auto sales, they are expected at 0.6%.  At 10AM are Business Inventories for June expected at 0.1%.

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Oil traded modestly higher this morning before the inventory report that saw crude inventories build 2.8 million barrels, distillate inventories build 2.6 million barrels, and gasoline inventories fall 2.1 million barrels.  Most had expected crude inventories to fall, resulting in an initial bearish reaction and a sell off in oil, though prices soon rebounded to set new record highs as traders concentrated on the drop in gasoline inventories.  Continuing strong world demand, refinery concerns, and geopolitical worries also remain on the minds of traders. Oil hit a new record intraday high at $65.00 before falling off just slightly and closing at a new record high of $64.90 with a gain of $1.83.  Gasoline hit a new record at 1.9890.

Treasuries traded slightly higher this morning, but turned lower after “a sale of $13 billion in new five-year notes drew only meager demand from indirect bidders, a category that includes foreign central banks.”  China’s currency revaluation could very well be the reason for the drop in foreign demand, as the need for currency intervention drops.  Should that trend continue, the demand for treasuries could drop off markedly in the coming months.

The Dow reached 5 month intraday highs with an over 100 point gain above 10,700 before dramatically falling off as oil hit new highs.  The Nasdaq and S&P followed a similar pattern as they traded nicely higher this morning, but steadily fell off in early afternoon trade to find losses by the close.

Among the big names making news in the market today were Unocal and Chevron, Lazard, Tupperware and Sara Lee, Whirlpool and Maytag, Krispy Kreme, Time Warner, Bayer, Lenovo, Cisco, Federated, Yahoo and Alibaba, Deutsche Telecom, and Allianz.

China finally announced the basket of currencies it will use to set the Yuan’s value.  They did not announce the exact percentages of each currency, but did say the major holdings will be the Yen, the US dollar, the euro, and the Korean won.  The U.S. dollar index traded lower throughout trade today and made new 2 month lows as the euro index made new intraday 2 month highs before falling off slightly to close within 0.19 points of its 2 month closing highs.

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

Gold traded slightly higher in Asia, extended its gains in early London trade, and held above the $435 level in mixed but higher traded in New York and ended with a gain of $2.30 to $436.10, just $1.30 from a new 6 week high.  Silver traded steadily higher in Asia, London, and New York and ended with a gain of $0.04 to $7.04.

The CRB index gained 5.27 points to 319.94, closing at its highest since the 24 year high close of 322.42 made last March 16^th.

Gold and silver equities rose throughout most of trade and made there intraday highs near their closing 4 month highs hit last Wednesday.  All three indices fell off just slightly in the last hour of trade, but still ended near those highs with nice gains.

More Precious Metals Analysis:

“The gold market pressed higher on Wednesday despite the fact that the Dollar failed to hold a downside breakout on the charts. We suspect that a fresh central bank sales threat from Belgium limited the gains but with oil prices soaring and the US and Iran gapping each other there would certainly seem to be some flight to quality buying potential in the gold market. News that China might be poised to launch into a second more powerful wave of metals buying off the growth of consumerism and urbanization lifted the copper and certainly gave some spill over support to both gold and silver in the action Wednesday.” - The Hightower Report, Futures Analysis and Forecasting

Gold & Silver Stock News Update from GoldReview.com:

More news on the mining strike in South Africa, and earnings from IAMGOLD, Apollo Gold, and Apex Silver 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, 10 August 2005 | Digg This Article

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