-- Posted Wednesday, 31 August 2005 | Digg This Article

Market Analysis from CapitalUpdates.com:

The preliminary figure for 2^nd quarter GDP came in lower than the expected 3.4% at 3.3%, being revised slightly lower than the advanced figure of 3.4% first given about a month ago.  The Chain Deflator came in as expected, unchanged at 2.4%.

Chicago PMI for August came in at just 49.2.  This comes in much lower than the expected 61.0 and much lower than July’s 63.5.  A reading under 50 indicates contraction, marking the first time the report showed contraction since April 2003.  High energy prices were blamed as businesses scale back production in anticipation of slowing economic growth.

Tomorrow at 8:30AM EST brings Initial Jobless Claims for 8/27 expected at 315,000.  Also at 8:30 are Personal Income for July expected at 0.5% and Personal Spending expected at 1.0%.  At 10AM is Construction Spending for July expected at 0.5% and the ISM Index for August expected at 57.0.

Oil started off the day lower on news that the U.S. will open up the strategic petroleum reserve (SPR) in order to help out with supply disruptions caused by Katrina, but it climbed back above $70 by the time that inventory numbers came out.  The IEA inventory report showed that crude inventories fell 1.5 million barrels, gasoline inventories fell 500,000 barrels, and distillates built by 2.7 million barrels.  The report was mixed and resulted in oil falling off to lose $0.87 to $68.94 by the end of trade as word came out that some refineries and pipelines are coming back online.  Unleaded gas for October delivery rose 5.56 to 225.53.  This means that the wholesale price of gas now goes for about $2.25 per gallon.  The retail price for a gallon of gas has climbed above $3 per gallon in many areas of the country.

Treasuries furthered their gains on prospects of slowing economic growth, with the yield on the 10-year falling to new 8 week lows.  The yield curve between 2 and 3-year notes inverted at one point this morning before correcting, though the spread at the close is only 1 basis point.

The Dow, Nasdaq, and S&P spent most of the day mixed and near unchanged on uncertainty surrounding the implications of Katrina, but all three indices rallied in the last hour or so of trade to end near their highs with nice gains.

Among the big names making news in the market today were MasterCard, Apple and Motorola, and Tiffany’s.

The U.S. dollar index fell off on the poor GDP reading and fell further after the poor Chicago PMI reading, resulting in both the euro and yen rebounding from recent losses.

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

Gold traded slightly higher in Asia and London before climbing to new highs in New York and ending near the highs of its session with a gain of $2.90 to $433.20.  Silver traded mixed and near unchanged in choppy trade in Asia, London, and New York, ending the session with a gain of $0.01 to $6.76.

Gold and silver equities rose throughout the day and ended at their highs with nice gains.

More Precious Metals Analysis:

“The gold, silver and platinum markets recovered off the lows in the wake of a significant reversal in the US Dollar. Apparently a reversal in the direction of oil prices revived speculative interest in the precious metals and that was a change of pace. However, the fickle nature of the precious metals remains a concern to the trade and with the market still generally holding a large than expected fund and small spec long position, it would seem like the market is faced with a near term limitation. At times during the day gold and silver were higher and copper was significantly lower and that is really a change of recent market action.” - The Hightower Report, Futures Analysis and Forecasting

Gold & Silver Stock News Update from GoldReview.com:

Mines Management’s 2^nd quarter results, Gold Fields’ backing of Aflease’s bid for Sub Nigel, Richmont Mines’ drilling results on the Valentine Lake property, Silver Standard’s ownership in Esperanza Silver, and First Silver’s exploration at the San Martin silver mine in Mexico 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, 31 August 2005 | Digg This Article

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