OUTSIDE MARKET DEVELOPMENTS:

While equity markets in Asia were generally higher during overnight trading, stock indices in Europe are mixed this morning. Early indications are that US equity markets will open with moderate losses later on today. The US Dollar is weaker against most of the major currencies this morning. The official Chinese Purchasing Managers index during November was 49.0, for a 1.4 decline from October's levels. French Unemployment during the third quarter was 9.7%, in-line with forecasts. A private survey of Euro zone manufacturing during November was at 46.4, in-line with expectations. Major US economic numbers to be released this morning include Weekly Jobless Claims at 7:30 AM, a private survey of Consumer Confidence at during November at 9:00 AM, a private survey of US manufacturing and October Construction Spending at 9:00 AM, as well as some private surveys of auto sales that will be released during the session. In addition, Fed Regional Presidents Lockhart and Bullard will speak during the session.
While there doesn't appear to be a full risk on vibe in place today, the gold trade looks to start the Thursday US session out with a favorable track. For the time being, the markets are generally confident that the EU/IMF scheme could keep Euro uncertainty contained. It also seems as if the concerted liquidity move by the central banks remains a supportive issue for gold and other physical commodity markets. Gold was probably given a slight boost this morning by news that French and Spanish bond auctions were decently received, as that increases the odds that the markets will get to the European closes today without a fresh anxiety event. With the markets also expecting generally positive US scheduled data flow from initial claims, ISM manufacturing and domestic auto sales, that might leave the gold bulls confident deep into the Thursday morning US trade. Traders should be on the look out for bigger than expected declines in either initial or ongoing claims today, as that news could take on added importance ahead of the monthly US payroll figures on Friday morning. While gold hasn't paid that much attention lately to classic physical demand side news, the trade might be lifted slightly by World Gold Council predictions of a 10% increase in Chinese gold demand this year. Part of the rise in Chinese gold demand however is offset by ideas that Chinese gold production is also expected to climb. A major brokerage firm might have given gold prices some additional support overnight from a report that suggested gold could continue to reap fresh demand from investors that are unhappy with low yielding inflation adjusted instruments. Comex Gold Stocks were 11.299 million ounces up 64,574 ounces. Gold stocks have declined in 12 of the last 20 days. Comex Gold stocks are now at their highest levels in the past 10. With February gold managing another upside breakout and the market seemingly attempting to entrench above the $1,750 level, it would seem as if the bull camp has partially solidified the upward track in gold prices. In retrospect, the rally in gold seems to be largely the result of declining Euro zone fears and to a lesser degree, a result of the pattern of better than expected US scheduled data. Therefore the gold market might be lifted by the scheduled data today but perhaps not as much as many would expect. In other words, good US data is helpful, but there will continue to be over hanging concerns off the Euro zone situation into that December 9th meeting date. Solid support in February gold is seen at $1,744 and initial resistance might not be seen today until the $1,762 level.