Compiled 10/16/12 6:00 AM (CT)
Statistics: London Gold Fix $1,737.50 -$9.75 LME Copper Stocks 210,725 tons -1,550 tons
GOLD MARKET FUNDAMENTALS: (6:00 AM CST) At times yesterday gold seemed to be under pressure because improved US data was serving to reduce expectations of additional US easing. Fears of adverse regulation for Index funds might have been another issue behind the liquidation in gold yesterday, as uncertainty over position limits is likely to foster a continuation of choppy commodity price action ahead. However, gold did see some buying in Asia overnight, with Indian gold importers becoming buyers after balking at high prices last week.
Given the supposed slump in gold prices, off improved US data, one might have expected gold prices to have slumped further this morning in the wake of a better than expected German ZEW reading, but instead gold prices have mostly held at or above yesterday's closing level. Gold could have been partially undermined in the wake of news of rising 3rd quarter gold production from a Russian gold mining concern overnight.
Investment in a gold derivative instrument declined yesterday for the first time since September 26th and that was probably the result of 5 down days in gold prices out of the prior 6 trading sessions. In the action today, gold is seeing a slightly positive outside market environment, with higher equities, favorable currency market action and gains in a long list of physical commodities at the start of the US Tuesday trading session. However, given expectations of a positive flow of US scheduled data today, it will interesting to see if the gold market will see additional liquidation off a further tamping down of future US easing prospects.
The bear camp might point to declines in open interest as a sign that some bulls are throwing in the towel, but seeing signs of improved activity in China and the US, is ultimately in the longer term interest of the bull camp in gold.
Comex Gold Stocks were 11.209 million ounces up 3,826 ounces. Comex Gold Stocks are now at the highest levels since 04/04/2012. Gold stocks have increased 11 of the last 20 days.
OUTSIDE MARKET DEVELOPMENTS: (6:00 AM CT) Chinese stocks were higher overnight, with Hong Kong shares providing the most positive leadership. In China overnight strength in property shares overcame weakness in banking shares, but the tone in the area was mostly positive. European shares were also higher off mostly positive data flow from the US yesterday, from China overnight and from Germany early this morning.
US shares were mostly unchanged to slightly higher early on but were still maintaining the gains forged in the prior trading session. The US scheduled data flow today will include CPI, Industrial Production, and a NAHB housing index result and expectations call for some modest improvement in the US data.
*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.Copyright CME Group All rights reserved.
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