Compiled 10/08/12 6:00 AM (CT)

Statistics: London Gold Fix $1,769.00 u.a. LME Copper Stocks 222,500 tons -175 tons

GOLD MARKET FUNDAMENTALS: (6:00 AM CST) Gold started off overnight with noted weakness in what seems to a partially delayed reaction to the improvement in the US unemployment rate. With the Dollar stronger and many physical commodity markets trading lower today, it would appear that even the technicals are contributing to the downward track on the gold charts. Apparently traders in Asia were banking profits on gold as a portion of the trade sees less flight to quality value in gold, in the wake of the US data last Friday but the downward revision in growth forecasts for Asia is another element that is probably providing the bear camp with some confidence.

Some suggest that gold is under pressure because the Friday US number could potentially reduce the duration of QE3, while others suggest that the lowest unemployment report in 4 years could make the US Fed less aggressive with statements in the near term. With December gold prices falling to the lowest level since October 1st to start, a weaker Euro and a number of physical markets trading lower, the bear camp probably feels like they have an edge to start the new trading week.

Comex Gold Stocks were unchanged at 11.013 million ounces.

The Commitments of Traders Futures and Options report as of October 2nd for Gold showed Non-Commercial traders were net long 239,940 contracts, an increase of 5,327 contracts. The Commercial traders were net short 302,628 contracts, an increase of 9,456 contracts. The Non-reportable traders were net long 62,687 contracts, an increase of 4,129 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 302,627 contracts. This represents an increase of 9,456 contracts in the net long position held by these traders. To last week's highs the December gold contract managed an additional $23 an ounce rally from the COT report mark off level and for some that is thought to have pumped up the non-commercial and non-reportable net long positioning.

OUTSIDE MARKET DEVELOPMENTS: (6:00 AM CT) Hong Kong and mainland Chinese shares were lower overnight off revived slowing fears and negative leadership from China Mobile. European equity markets were also weakened off slackening Asian growth expectations from the World Bank. US equities were weaker start as the trade seemed to be faced with a risk off day ahead.

The markets might be a little put off by the fact that US Consumer credit readings on Friday afternoon showed a rather large build, as that could suggest to some, that growth in the US is being facilitated by the unsustainable use of credit.

The US economic report slate is empty today, because of a partial holiday and that could allow the partial risk-off vibe to remain in place.
 

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