OUTSIDE MARKET DEVELOPMENTS:

Equity markets in Asia were mostly lower overnight as the markets in that area were still fearful of the upcoming European debt auction results. However, European equity markets were higher and managed to add to the upward tilt in the wake of the actual auction results, as traders were impressed with the amount of debt that was taken down by investors and by the relatively low yields achieved. The US equity markets look poised to start out higher today. The US Dollar has started out weaker against the euro, but it might show some minor gains versus the Yen. Overnight the markets saw evidence that Chinese inflation readings that were somewhat concerning to some equity market players but apparently Shanghai copper traders saw the inflation readings to be just muted enough, to give the PBOC some latitude with respect to policy decisions. The markets were also presented with weak UK and Euro zone industrial output figures, but those readings were largely lost in the shuffle of the European debt auction results. In looking ahead, the US markets will see another US debt auction today of 30 Year instruments, but the trade will first be presented with retail sales, initial claims and business inventories. US data might be countervailing, as claims are expected to rise, while retail sales are expected to make a minimal gain over the prior month.
With a strong upward extension to start and the highest price in February gold since December 13th, it would seem like the gold trade has picked up where it left off yesterday. In addition to ongoing hope of strong Asian physical gold demand, the gold market is seemingly drafting support from ideas that the Euro zone debt crisis is likely to calm down for a while and that could allow for further improvement in global macro economic psychology. The gold market might have been boosted overnight by a private analyst prediction that gold prices might be set to trend higher for the next few years, especially since that analyst also predicted ongoing central bank buying of gold. Usually credible suggestions of central bank buying have a lasting positive impact on gold prices, especially if the prevailing short term trend in gold prices is pointing upward. With somewhat supportive currency market action overnight and a US Fed member yesterday afternoon calling for ongoing easy money policies to cure high US unemployment, even if that policy prompts inflation, it is possible that gold is garnering some lift from renewed inflationary expectations. In order for the bulls to continue to extend their control over gold prices today probably requires positive US economic data and ongoing gains in US equities. Comex Gold Stocks were 11.460 million ounces down 32 ounces. Stocks have declined 12 of the last 20 days. Critical support moves up to $1,653 in February gold and there might not be much in the way of resistance on the charts until the $1,660 level. Gold is a physical commodity market that appears to be facing upbeat macro economic views and is perhaps poised to see another "risk-on" session. Some traders think that gold is capable of a near term pulse back up to $1,700 and seeing the euro zone crisis tamped down temporarily and seeing sharply rising energy prices, would seem to give the bull camp in gold three stories for every bearish story on the wires.