OUTSIDE MARKET DEVELOPMENTS:

Asian equity markets were mostly higher overnight off residual lift from the US ISM figures that were released yesterday. However, the Nikkei and the Straits Times were lower last night but those declines were minimal. European stocks were weaker overnight off renewed debt and deficit concerns toward the situation in Spain. Apparently news of a larger European Firewall hasn't completely tamped down residual Euro zone debt concerns as there are also concerns circulating on Portugal in the overnight trade. US stocks were marginally weaker overnight, with the markets already looking ahead to the release of last month's FOMC meeting minutes. In addition to the FOMC meeting minutes release later today the markets will also be presented with a US Factory Orders report and US auto sales figures. Factory orders are expected to be higher, but US auto sales figures are expected to show a slight drop from the prior month.
The gold market is off to a weaker start today, as the world economic view is somewhat soft and there have been some renewed concerns toward Spain in the early going today. Apparently a number of physical commodities and a host of global equity markets tracked higher yesterday because of the Monday US numbers and therefore the US Factory Orders release later this morning might be the key event of the trading session. However, the gold market seems to be anticipating a weakening of economic activity in the wake of a weak start in US equities and with an ongoing Indian jewelers strike still denting Indian gold import demand overnight, gold was seeing negative impacts from inside and outside market forces. Apparently Indian gold imports are expected to fall off by as much as 15 to 20 tons because of the strike, which in turn is a protest against an increase in import taxes. Gold might also be undermined by a short term negative price forecast from a large European bank overnight, but some traders think that gold has overall held up fairly impressively despite the demand turmoil in India. In the end, the outlook for the US economy looks to be the main focal point of the gold trade today, with events in the Euro zone for the time being taking a back seat. For direction today traders probably need to look to the direction of US equities and to the US Factory Orders result. Later in the day, the gold bulls probably need to see some potential for additional US QE or there could be a modest negative reaction in gold prices. Comex Gold Stocks were 11.352 million ounces up 1,830 ounces. Gold stocks have declined 11 of the last 20 days. The gold market from last week's lows to the highs yesterday was able to post of gain of $38.70 an ounce! Therefore the gold market is short term technically overdone and we have to think that the gold market is also a little overbought on the fundamental outlook. However, the gold bulls could be bailed out if the Fed simply hints at more easing, or for others gold might be able to rise if they fail to clearly shut the door on additional easing potentials. Critical support in June gold today is seen at $1,672.90, but it could take a rise back above $1,685.20 to put the bull camp back in definitive control.