Compiled 02/22/11 6:00 AM (CT) Statistics: London Gold Fix $1385.50 +$8.50 LME Copper Stocks 411,750 tons +275 GOLD MARKET FUNDAMENTALS: (6:00 AM CST) April gold soared to new highs have for the move yesterday and again overnight as the unrest in the Middle East and North Africa, especially in Libya, sparked safe haven support. Profit-taking seems to have pulled the market $18.20 off of its highs after being up $22.9 from Friday's close overnight. The fact that the US was out on holiday yesterday limited the volume and likely increased the volatility. The Libyan unrest is the first to occur in a major oil producer, and the potential for these events to have an effect on the worldwide economy is palpable. Oil production out of that country is set to decline; international oil companies and subcontractors are evacuating staff. There are reports that Qaddafi's hold on the country is slipping, but the relative lack of communication makes the situation difficult to judge. Gold has gained on safe-haven buying, but so have the Dollar, U.S. Treasuries and crude oil. China's interest rate hike last week has completely slipped into the background as the events in Libya have come to the forefront. Last week gold was presented with private forecasts of a tripling of Chinese demand but also with views that Chinese gold production was set to rise. Bahrain's King Hamad has ordered the release of a group of political prisoners, which may help ease tensions and pull some of the safe-haven support from the precious metals. Overnight it was reported that Gold Fields, South Africa's 2nd largest mining company plans to increase output by 5.7% in 2011. Comex Gold Stocks were 11.206 million ounces down 47,460. The Commitments of Traders Futures and Options report as of February 15th showed non-commercial traders were net long 199,425 contracts, an increase of 8,144 contracts. Non-commercial and nonreportable traders combined held a net long position of 247,176 contracts, up 11,200 contracts. Both of these positions are well off of their peak levels of 283,462 and 328,344, which were reached back in October. OUTSIDE MARKET DEVELOPMENTS: (6:00 AM CST) While equity markets in Asia and Europe were generally lower during overnight trading, early indications are for the US stock market to open with sizable losses this morning. The Dollar is stronger against most of the major currencies during overnight trading, although posting small losses against the Yen and the Swiss Franc. Libyan leader Qaddafi has appeared on television to refute rumors that he fled the country, although the situation in that nation remains volatile. Iranian warships have entered the Suez canal on their way to the Mediterranean Sea. A credit ratings agency has warned Japan of a debt rating reduction if that nation does not bring public debt levels under control. A private survey of German Business Sentiment during February was at 111.2, higher than expectations and at a record high level. A private survey of German Consumer Confidence during February was at 6.0, in line with forecasts. Major US economic numbers to be released this morning include a private survey of US Housing Prices at 8:00 AM and a private survey of US Consumer Confidence at 9:00 AM. In addition, Fed Regional President Kocherlakota will give a speech during the session.
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