Compiled 09/11/12 6:00 AM (CT)
Statistics: London Gold Fix $1,731 -1.00 LME Copper Stocks 214,700 tons -50 tons
GOLD MARKET FUNDAMENTALS: (6:00 AM CST) The gold market is consolidating ahead of the FOMC meeting this week, as anticipation is building that the Fed will announce a fresh round of quantitative easing, almost to the point of it being a foregone conclusion. A major investment bank is looking for the Fed to include open-ended purchase of Treasuries and mortgage-backed securities and an extension of the low interest rate policy out to 2015 in its strategy to boost economic activity.
The German High Court is expected to rule on the legality of the European bailout fund tomorrow. A negative decision on that issue, while not expected, could certainly roil the markets as it would likely spark a flight to quality into the dollar, which would pressure gold. But the effect could be limited until the FOMC release the following day.
China's new lending in August was the highest of any August on record at 703.9 million Yuan versus a 600-billion estimate at 540 billion in July. This news is supportive to gold and other commodities, as it indicates that China is moving aggressively on their infrastructure rebuilding efforts.
Speculative interest in gold continues to grow; exchange traded funds have reached 72.492 million ounces, an all-time record. With so much anticipation for the FOMC meeting, it would seem to be hard for the Fed to come up with a bullish "surprise," but that doesn't mean the market won't make a quick move higher once the program is announced.
Comex Gold Stocks were 10.791 million ounces down 127,891. Stocks have declined 14 of the last 20 days and are at the lowest in the past 10 readings.
OUTSIDE MARKET DEVELOPMENTS: (6:00 AM CST) Asian equity markets were generally lower during overnight trading, with the Japanese Nikkei down 0.79% and the Shanghai A Share index down 0.67%. European stock indices are under pressure, with Spanish and Italian equities down 1%.
However, US stock futures were posting moderate gains during overnight trading while the Dollar was trading lower coming into this morning's session. The UK Trade deficit during July was 7.15 billion Pounds, lower than market expectations. German Wholesale Prices during August were up 3.1% year-on-year, higher than market forecasts.
US economic data during today's session will include a reading on the International Trade Balance during July.
*Disclaimer: The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed therein constitutes a solicitation of the purchase or sale of any futures or options contracts.