Compiled 11/07/11 6:00 AM (CT) Statistics: London Gold Fix $1,764.00 +8.00 LME Copper Stocks 415,325 tons -2,525 tons GOLD MARKET FUNDAMENTALS: (6:00 AM CST) With December gold clawing its way to the highest level since September 22nd overnight and the markets seemingly fearing more trouble in the Euro zone, one gets the impression that gold is shifting back into a flight to quality market. In fact, the gold market has managed the gains this morning in the face of a stronger US dollar, weaker equities and weakness in a host of physical/industrial commodity markets. While some might point to the new government in Greece as a positive development for physical commodity markets this morning, crude oil, copper, equities and other markets didn't appear to be up beat on the Euro zone situation as a result of the initial headlines this morning. Perhaps flight to quality players in gold think there are just too many issues still in play within the Euro zone situation to anticipate a sustained drift away from widespread fears of an eventual chain reaction contagion type meltdown. With the US scheduled economic report window somewhat thin this week, it is possible that the gold market will take most of its direction from the European headline flow. Some traders think that fears of lower demand for US Treasury supply this week might facilitate an influx of investment back into gold, but that theory won't be tested until the Tuesday auction of 3 Year notes. At least in the early action today, there were rumors circulating that the Italian Prime Minister might step down but even that rumor left gold trading near its overnight highs. Comex Gold Stocks were 11.212 million ounces down 692 ounces. Stocks have declined 13 of the last 20 days. Comex Gold stocks are at the lowest in the past 10 readings. The Commitments of Traders Futures and Options report as of November 1st for Gold showed Non-Commercial traders were net long 178,056 contracts, an increase of 9,713 contracts. The Commercial traders were net short 222,354 contracts, an increase of 13,576 contracts. The Non-reportable traders were net long 44,297 contracts, an increase of 3,862 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 222,353 contracts. This represents an increase of 13,575 contracts in the net long position held by these traders. OUTSIDE MARKET DEVELOPMENTS: (6:00 AM CST) While equity markets in Asia were mixed during overnight trading, stock indices in Europe are generally lower this morning. Early indications are that US equity markets will open with sizable losses later on today. The US Dollar is stronger against most of the major currencies this morning, although posting a small loss versus the Yen. The Greek Prime Minister and opposition leaders agreed on the formation of a new caretaker government, with a new head of state expected to be chosen today. A private survey of UK housing prices during October was up 1.2%, higher than market forecasts. Euro zone Retail Sales during September were down 0.7%, weaker than expectations. The only major US economic number to be released today will be a September US Consumer Credit reading at 2:00 PM. In addition, Fed Governor Rosengren will speak during the session.
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