Compiled 09/17/12 6:00 AM (CT)

Statistics: London Gold Fix $1,767.25 -5.25 LME Copper Stocks 216,700 tons -475 tons

GOLD MARKET FUNDAMENTALS: (6:00 AM CST) While December gold managed to climb to the highest level since late February last week, in the wake of the aggressive easing talk from the US Fed, gold prices this morning have started out on a back foot.

Tensions in China, an increase in Indian diesel fuel prices late last week, weak equities and a stronger Dollar have given the bear camp a minor edge to start the new trading week. However, aggressive promises from the US Fed and signs of positive reforms in India ahead could serve to underpin gold and other physical commodity markets in the near term trading horizon. However, some traders are concerned that slack scheduled data flow from inside and outside of the US could now weigh on commodity prices, as the prospect of additional easing from the US in the short term is thought to be very unlikely. In fact, weaker Chinese data and turmoil between China and Japan could become a fresh drag on economic sentiment world wide. Prospects of a trade war between China and the US is another element that could serve to weigh on gold prices.

However, some traders are pointing to the definitively dovish stance of the US Fed last week and to the noted increase in volume and open interest in the gold futures trade, as a sign that investors and traders remain interested in gold, despite the sharp gains of the last two weeks.

Comex Gold Stocks were 10.883 million ounces down 97,785 ounces. Stocks have declined 12 of the last 20 days.

The Commitments of Traders Futures and Options report as of September 11th for Gold showed Non-Commercial traders were net long 203,923 contracts, an increase of 19,199 contracts. The Commercial traders were net short 260,430 contracts, an increase of 24,929 contracts. The Non-reportable traders were net long 56,508 contracts, an increase of 5,730 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 260,431 contracts. This represents an increase of 24,929 contracts in the net long position held by these traders.

OUTSIDE MARKET DEVELOPMENTS: (6:00 AM CST) Asian equity markets were weaker overnight in the face of escalating tensions between Japan and China. European stock indices were modestly lower as the positive influence of last week's easing news was seemingly missing in the early going today. Apparently fresh reforms in India were unable to spark optimism in that country as a long overdue hike in domestic energy prices last week was seen as an inflationary threat. News that the US might file a trade complaint against China was another factor that might have been contributing to the risk off vibe that was in place in the early Monday US trade action. Today the markets will be presented with a US Empire State Manufacturing report that is generally expected to remain in negative territory.

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*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.