Compiled 10/11/12 6:00 AM (CT)

Statistics: London Gold Fix $1,767.25 +$4.25 LME Copper Stocks 219,550 tons +125 tons

GOLD MARKET FUNDAMENTALS: (6:00 AM CST) The gold market seemed to shift back into a flight to quality market overnight, as gold prices seemed to be lifted in the wake of the S&P downgrade of Spain. Others have suggested that buyers of gold moved into the metals because the S&P news might prompt Spain to request aid sooner than they might have otherwise. It is also possible that gold found some lift overnight from the Fed's Yellen who suggested that central banks world wide need to fight deflation aggressively. It is also possible that Yellen's comments calling for more domestic demand expansion in China, served to stimulate overnight buying of gold.

An element favoring the bear camp this morning in gold is news that South African gold production in August managed a minor rise, as that goes against an entrenched trend of declining gold production. Countervailing the minimal rise in South African monthly gold production is news overnight that striking gold miners have initially rejected the latest wage offer.

Some traders think that renewed credit concerns toward the EU, will limit gold prices ahead as another breakdown in Euro zone sentiment off credit concerns raises the threat of deflation again.

The biggest reaction in gold to the US data flow today is likely to be seen in the wake of the US claims readings, but with a number of Fed members are poised to speak today, and therefore one can't rule out a surprise lift from the Fed.

Comex Gold Stocks were 11.201 million ounces down 4,137 ounces.

OUTSIDE MARKET DEVELOPMENTS: (6:00 AM CT) Chinese stocks were mixed again overnight, as Hong Kong shares managed to rise while Shanghai and Shenzhen shares were lower perhaps because of overnight comments from the Fed's Yellen that suggested Asian economic momentum had slowed recently. European stocks might have been knocked off balance by the S&P downgrade of Spain, but some markets have spun that development into a positive, as statements from the S&P credit analysts suggested that seeing Spain wait to request an official bailout was partly behind the credit rating cut. It is also possible that calls for reduced austerity in Europe, to battle the threat of recession, have provided the metals markets with a lift this morning.

US equity markets were also higher early on as investors saw favorable earnings results in Europe and there was some residual positive spin seen from yesterday's US Fed Beige book release.

Today the markets will be presented with a weekly claims reading, that might take on added importance because of the looming election and also because of the surprising decline in the US unemployment rate last Friday. Also due out today, are US Trade numbers, a flurry of speeches from the Fed and a 30 Year bond auction in the early afternoon.
 

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