By Nell Sloane

While equity markets in Asia were mixed, stock indices in Europe are generally higher this morning. U.S. equities are trading moderately higher during the early Thursday trade. The Dollar was weaker against most of the major currencies during overnight trading. The Federal Reserve's Beige Book indicated uneven growth for the US economy, with several regions experiencing a slowdown. BP will attempt to permanently seal an oil well in the Gulf of Mexico that caused the huge oil spill over the past few months. Japanese Retail Sales during June were up 3.2% year-on-year, in line with market forecasts. A survey of Business and Consumer sentiment in the Euro zone during July rose to 101.3, higher than expected. The German Unemployment rate during July fell to 7.6%, roughly in line with market forecasts and at the lowest level since 2008. The French Producer Price Index during June was up 3.5% year-on-year, lower than expectations. UK individual borrowing during June was 0.6 billion Pounds, lower than expected. The final leg of the monthly US refunding, the 7-year note auction, will have its results announced at 12:00 PM. The only major US economic number to be released this morning will be Weekly Jobless Claims at 7:30 AM.

GOLD MARKET FUNDAMENTALS:

Gold is finding modest support this morning off of a weaker dollar and physical buying in Asia. The state of California declaring a "State of Fiscal Emergency" (which it also did last year at this time) may heighten anxiety over the US economic situation today and further undermine the Dollar. This could increase investor risk aversion and support gold. Strong physical buying for the fourth day in a row in India also lends support and has provided a lift after the steep sell-off earlier this week. However, investor demand has been slipping this week and has been especially noted in net outflows from exchange-traded funds. Traders have noted that after the steep sell-off this week, and any return to economic anxiety is likely to boost interest in gold, and that could come in the Weekly Jobless Claims number this morning. New three-month lows in the Dollar this morning can also lend support to gold. With this week's decline, October gold has fallen to a 50% retracement of the February-June rally. Traders interested in entering a long position off of anticipation of a return to risk-aversion could do so against yesterday's low of 1157.50 with an initial objective of 1212. Near-term resistance comes in at 1193. The market is deeply oversold, so a correction could be quick and sharp.

SILVER MARKET FUNDAMENTALS:

Silver appears to be getting a bounce this morning off higher equity pricein Europe, the weaker dollar, and modest gains in other commodities like crude oil. This comes after a disappointing day yesterday, during which September silver fell to its lowest level since July 7th. Yesterday's disappointing US economic numbers were the trigger for early pressure on the market, but equity markets holding their ground in the face of negative news was a critical factor in preventing the selloff from turning into a washout. The California budget crisis adds some anxiety the US economic outlook this morning, but while this can be supportive to gold, it is a mixed bag for silver. Any gains made by an increase in its "safe-haven" status will be undermined by concerns over reduced industrial demand for the metal. These days silver appears to do better when there are strong economic indicators, and the market has not gotten much help in that direction this week. A series of lower lows and lower highs since the June 18th pea suggests September silver could continue to press the bottom of the consolidation range that has been in place since the May peak. The next support levels come in at 17.23 and 17.15. Trendline resistance comes in today at 18.11.

METALS TECHNICAL OUTLOOK:

Note: Technical commentary is based solely on statistical indicators and does not necessarily correspond to any fundamental analysis that
may appear elsewhere in this report.

COMEX GOLD (AUG) 07/29/2010: Momentum studies are declining, but have fallen to oversold levels. The market's close below the 9-day moving average is an indication the short-term trend remains negative. The upside closing price reversal on the daily chart is somewhat bullish. The market's close below the pivot swing number is a mildly negative setup. The next downside target is now at 1152.5. The next area of resistance is around 1168.2 and 1171.3, while 1st support hits today at 1158.8 and below there at 1152.5.

COMEX SILVER (SEP) 07/29/2010: A bearish signal was triggered on a crossover down in the daily stochastics. Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The market's close below the 9-day moving average is an indication the short-term trend remains negative. It is a slightly negative indicator that the close was lower than the pivot swing number. The next downside objective is 1710.4. The next area of resistance is around 1771.2 and 1793.3, while 1st support hits today at 1729.8 and below there at 1710.4.