OUTSIDE MARKET DEVELOPMENTS:

Equity markets in Asia were mostly weaker overnight but that action was reportedly forged on extremely thin trade action. Stocks in Europe were showing modest gains to start the Thursday trade. Early indications are that the US markets will also open with minimal gains later on today. The US Dollar was weaker against most of the major currencies to start today but it was losing some ground against the Canadian and Australian dollars. In the overnight action, the markets saw evidence of the largest UK current account deficit ever and it also saw news that Italy's new leader is set to face a vote on the latest austerity plan. There was also news that Lufthansa was selling its bmi unit to British Airways, while Toyota predicted the prospect of record sales figures for 2012. The scheduled data flow from the US today brings forth weekly claims figures, a 3rd quarter GDP reading, corporate profits, a Chicago Fed National activity index, a couple of private sentiment readings, Leading indicators and a reading on mass layoffs. In other words, an extremely active flow of US data will be seen today and that could put the status of the US economy back on display again.
Apparently the gold trade isn't as upbeat toward world conditions this morning as are most global equity markets. Unfortunately for the bull camp in gold, the latest EU maneuver utilizing 3 year instruments produced only fleeting confidence in the ability to aggressive tamp down the Euro zone debt threat. Gold might have been undermined by comments overnight from Japanese official, who suggested that the biggest threat to the Japanese economy was the Euro zone crisis, as Japan has significant deflationary problems and the residual drag from natural disasters, but yet its officials still fear the Euro zone crisis the most! Tempering the slide in gold is generally higher global equity market action and a minimal slide in the dollar. Since the Euro zone news wire early today was mostly quiet, the gold market is likely to take a little more direction from an extremely active flow of US data. More than likely gold will take the most direction from the US GDP revision and perhaps from the US weekly claims report. Gold might also be seeing some fresh pressure from talk that specific precious metals markets might see some money rotate away in the New Year. Some traders suggest that the aggressive declines in gold prices in September and December have soured some managers, who were dismayed that gold has started to decline in obvious safe haven environments. It is also possible that gold is at least partially undermined as a result of fresh Fitch ratings warnings toward the US. At least into the start of the Thursday US gold trade, the market looks to track like a physical commodity market in need of growth assurances from the US data front. Comex Gold Stocks were 11.227 million ounces down 203,742 ounces. Comex Gold stocks are at the lowest in the past 10 readings. Gold prices start the session today vulnerable to corrective action, especially with the February gold contract at times overnight sitting as much as $39 an ounce below yesterday's highs. Unfortunately for the bull camp in gold, the clear cut risk-on vibe in place early yesterday morning was lost rather quickly and that seems to have killed the prospect of a strong holiday inspired run up in equities and physical commodity markets. In short, the gold bulls probably need very strong scheduled US data, just to jolt the market out of a slight liquidation tilt. Initial support in February gold is seen at $1,607.70 to start today, but more significant support is seen down at $1,604.40. In conclusion, the numbers have to be surprisingly strong to shift the bull camp back into control.