Compiled 10/17/12 6:00 AM (CT)

Statistics: London Gold Fix $1,747.75 +$10.25 LME Copper Stocks 224,450 tons +13,725 tons

GOLD MARKET FUNDAMENTALS: (6:00 AM CST) Gold initially showed signs of strength early overnight but the market was unable to sustain a push above $1,750 in the December gold contract. Gold was seeing mostly favorable currency market action but physical commodity market action overall was mixed in the early trade. Gold might have been partially undermined by news that almost a third of striking workers at a Gold Fields mine had reported back to work today and that could leave as many as 15,000 workers still on strike.

Another development that might be applying some minor pressure to gold prices this morning is news that a Russian gold miner saw its production in its 3rd quarter post an all time high of 317,000 ounces. Another Swiss owned miner reported production overnight and therefore it is possible that a small portion of the South African labor problems will be discounted by higher output talk. Indian importers have once again shied away from gold and that isn't surprising considering that gold prices to the overnight high were roughly $26 an ounce above last week's lows.

It did seem as if gold yesterday tried to transition from a market driven almost exclusively by the "hope" for additional easing, to a market that can be periodically cheered by evidence of growth in the world economy. Therefore it will be a test today to see if gold prices can manage to rise in the face of positive US housing data later this morning.

At least in the early Wednesday trade, the outside market environment was mixed with favorable currency, non descript equity market action and gains in physical commodities limited to precious metals and grain prices.

Comex Gold Stocks were 11.209 million ounces down 225 ounces. Gold stocks have increased 11 of the last 20 days.

OUTSIDE MARKET DEVELOPMENTS: (6:00 AM CT) Chinese stocks were mostly higher overnight, with the Hang Seng reaching up to a fresh 7 month high. Once again the Chinese markets were lifted by strength in Banking and financial shares.

European shares were mixed to slightly higher overnight with the CAC down early and the DAX higher. European investors could have been cheered slightly by a rise in Euro zone Construction Output and perhaps the markets were relieved that Moody's decided not to cut Spain's credit rating.

US shares were mostly unchanged with the trade looking ahead to US housing starts and permits data, that will be released later today. Expectations for the US Housing data call for a minor improvement in Housing starts, but not much change in the more forward looking Housing permits figures.
 

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