Morning Gold Market Report
Compiled 10/17/11 6:00 AM (CT) Statistics: London Gold Fix $1,689.00 +$13.00 LME Copper Stocks 451,650 tons +452 tons GOLD MARKET FUNDAMENTALS: (6:00 AM CST) Residual weakness in the Dollar, hope that the Euro zone debt debacle will avoid full blown contagion status and ideas that a deep recession might be avoided, have seemingly given the gold market renewed investment interest this morning. Apparently the gold trade wasn’t overly concerned with news of a rise in Chinese monthly gold production overnight. Given that Chinese monthly gold production is almost 32 tons a month, some traders might have seen the overnight supply news as a negative. However, the gold market remains focused on the ebb and flow of investment demand for gold and currently there isn’t that much interest in the classic supply side of the equation. With a key Middle Eastern central bank overnight discounting talk it has recently bought gold and in turn suggesting that they would not get into speculative assets like gold, which in turn could have been seen as a negative demand story. Given the action in gold prices overnight, it would seem like the gold trade is also embracing the potential for more positive macro economic conditions ahead. In other words, the gold bulls might be hopeful of positive scheduled data from US Industrial Production and capacity utilization reports and the bull camp might also be hopeful of more upside action in the US equity markets. Comex Gold Stocks were 11.117 million ounces down 450. Stocks have declined 14 of the last 20 days. The Commitments of Traders Futures and Options report as of October 11th for Gold showed Non-Commercial traders were net long 168,022 contracts, an increase of 5,708 contracts. The Commercial traders were net short 203,979 contracts, an increase of 7,773 contracts. The Non-reportable traders were net long 35,957 contracts, an increase of 2,066 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 203,979 contracts. That represents an increase of 7,774 contracts in the net long position held by these traders. OUTSIDE MARKET DEVELOPMENTS: (6:00 AM CST) While equity markets in Asia and Europe were generally stronger during overnight trading, early indications are that US equity markets will open with moderate gains later on today. The US Dollar is slightly weaker against most of the major currencies, although posting a gain versus the Yen and Pound. Germany and France are expected to announce plans this week to raise the size of the Euro zone rescue fund up to 2 trillion Euros. The German Finance Minister stated that the “haircut” on Greek sovereign debt will need to be higher than the 21% under consideration during the summer. Major US economic numbers to be released this morning the NY Fed’s Empire State manufacturing survey at 7:30 AM, and September Industrial Production and Capacity Utilization at 8:15 AM. In addition, Fed Regional Presidents Lacker and Evans will give speeches after the close.
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